Financial Accounting: Depreciation

Question

A company buys equipment for $54,000, expects to use it for Five years, and then sell it for $6,600. Using the straight-line method, the company should report annual depreciation for the equipment of:

$9,480.
$21,660.
$18,960.
$10,800.

Answer 1

Annual straight-line depreciation= (Cost - residual value)/estimated years in life

 

Annual straight-line depreciation= (54,000 -6,600)/5

 

Annual straight-line depreciation= (46,400)/5

 

Annual straight-line depreciation= 9,480