Under straight-line depreciation, what is the annual depreciation for an asset costing 100000 with a salvage value of 10000 and a useful life of 8 years?

Under straight-line depreciation, what is the annual depreciation for an asset costing 100000 with a salvage value of 10000 and a useful life of 8 years?

• A. 11250
• B. 12500
• C. 9000
• D. 10000

Answer: (A)

Straight-line depreciation allocates the asset’s cost minus its salvage value evenly over its useful life. Here, the depreciable base is 100,000 minus 10,000 equals 90,000. Divide by 8 years: 90,000 / 8 = 11,250 per year. So the annual depreciation is 11,250. The other numbers come from common mistakes, like using the full cost (12,500 would come from 100,000 / 8), or using the salvage value or a different life (9,000 or 10,000).

Straight-line depreciation allocates the asset’s cost minus its salvage value evenly over its useful life. Here, the depreciable base is 100,000 minus 10,000 equals 90,000. Divide by 8 years: 90,000 / 8 = 11,250 per year. So the annual depreciation is 11,250. The other numbers come from common mistakes, like using the full cost (12,500 would come from 100,000 / 8), or using the salvage value or a different life (9,000 or 10,000).