a company acquires equipment for $50,000 and expects to use the equipment for 5 years. salvage value at the end is expected to be $10,000. the amount of annual depreciation by the straight-line method is $

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24-10-2022
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a company acquires equipment for $50,000 and expects to use the equipment for 5 years. salvage value at the end is expected to be $10,000. the amount of annual depreciation by the straight-line method is $

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ANJALIMARDI ANJALIMARDI · Answer 1 · 2022-11-04T04:12:23-04:00

The amount of annual depreciation by the straight-line method is $8000.

What is annual depreciation?

Annual depreciation is described as the rate at which an asset or equipment loses its value after it is purchased and used. It is important to mention that the fixed asset loses its value and the depreciation takes annually. It can also be highlighted that any asset can lose its value especially when it undergoes wear and tear, and due to its usage, it loses its original value.

Given that,

Cost of the equipment = $50,000

Salvage value = $10,000

Useful life = 5 years

As per the formula of annual depreciation by the straight-line method,

Annual depreciation = (cost of the equipment - salvage value)/life = (50,000 -10,000)/5 = 40,000/5 = $8000

It can be concluded that the amount of annual depreciation by the straight-line method is $8000.

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