Equipment acquired at the beginning of the year at a cost of $340,000 has an estimated residual value of $45,000

Equipment acquired at the beginning of the year at a cost of $340,000 has an estimated residual value of $45,000 and an estimated useful life of 10 years. Determine (a) the depreciable cost, (b) the straight-line rate, and (c) the annual straight-line depreciation.

Answer:

a. $295,000  ($340,000 – $45,000)

b. 10%  (100% ÷ 10)

c. $29,500  ($295,000 × 10%) or ($295,000 ÷ 10 years)