Q) An asset has a cost of $50,000. Transportation to get to its place of destination is $3,000, taxes related to the purchase total $2,000, other costs necessary to make it functional amount to $5,000. It has an estimated life of 10 years. What is the amount of its annual depreciation using the STRAIGHT Line method?

A) $5,000
B) $ 6,000
C) $ 7,000
D) $ 3,000


The salvage value is not given. How can I solve this problem without salvage value?

The depreciable cost of the asset is all costs incurred to bring the asset in working condition. If the taxes are refundable, they will be excluded. All you need to do is add the cost and divide by the expected useful life of the asset to get SLM depreciation.

The easy answer is that there doesn't have to be a salvage, so it's zero.

okay, I'm getting...

50,000 + 3,000 + 2,000 + 5,000 = 60,000


Depreciation expense = 60,000/ 10 = 6,000

Thanks for the help. :)