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Sheffield Corp. purchased a depreciable asset for $175100. The estimated salvage value is $14700, and the...

Sheffield Corp. purchased a depreciable asset for $175100. The estimated salvage value is $14700, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
$17510
$160400
$16040
$175100
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Answer #1

Solution:-

Depreciation Under Straight Line Method is calculated as follows :-

Depreciation = Cost of an asset - Estimated salvage value / Useful Life

Depreciation base is the value of the asset to be written off over time. Under Straight line Method,

Depreciation Base = Cost of an Asset - Salvage value of an Asset

In This Case,

Cost of an Asset = $ 175100

Estimated salvage value = $ 14700

Depreciation Base = $ 175100 - $ 14700

= $ 160400   

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