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21 June, 16:40

What will be the depreciation, via the straight line method, if the cost of a plant is $43,250, estimated disposal value is $3,250, and the estimated useful life of plant is five years?

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  1. 21 June, 20:33
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    depreciation expense per year 8,000

    Explanation:

    The first step, is to calculate the depreciable amount for the asset:

    cost - salvage value = amount subject to depreciation

    43,250 - 3,250 = 40,000 = depreciable amount

    Then, we calculate the depreciation per year:

    depreciable amount / useful life = depreciation per year

    40,000/5 = 8,000

    In some particular cases, the first year the asset enter the accounting it could be for a period of half the accounting period, so only half-year depreciation is appliedon the first year.
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