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?

A)$40,000
B)$4,000
C)$3,500
D)$8,000

Question

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?

A)$40,000
B)$4,000
C)$3,500
D)$8,000

rissyroo118 · Answer

@mathmate

mathmate · Answer

Basic the straight line method goes as follows:
The annual depreciation is how much the plant loses per year.
So the total depreciation is obtained by subtracting the salvage value from the initial cost.
Annual depreciation is the total depreciation / number of years before disposal.

It is not explicitly specified whether the depreciation required is total or annual depreciation.

In the absence of explicit instruction, "depreciation" would be interpreted as the total depreciation.  However, this does not depend on the method of calculation.  If straight line method is mentioned, I would assume that annual depreciation is asked for.
So use
Annual depreciation = total depreciation / number of years before disposal.

rissyroo118 · Answer

hm give me a moment because it isn't clicking for me just yet lol

rissyroo118 · Answer

okay so i think it would be 43,250-3,250=40,000 
than 40,000/five years=8,000

mathmate · Answer

Yes, that agrees with what I think.
Although the fact that they did $not$ specify "annual depreciation" still bugs me.  But then this is the best I can do.

rissyroo118 · Answer

yeah i know some of there questions they give i can never fully understand myself , but $8,000 was the correct answer!