A refrigerator used by a wholesale warehouse has a cost of $64,000, an estimated residual value of $5,200

A refrigerator used by a wholesale warehouse has a cost of $64,000, an estimated residual value of $5,200, and an estimated useful life of 12 years.what is the amount of the annual depreciation computed by the straight line method?

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Expert Solution

Straight line Depreciation : The straight line method of depreciation allocates the same amount of depreciation each year across the anticipated useful life of an item. The formula for calculating the asset's depreciation cost using the residual value.

Depreciation cost = Cost of the asset - Residual value / Estimated life of an asset

Calculation of annual depreciation using straigh line method

Annual Depreciation = Cost of asset - Residual value / Estimated useful life of the asset

=$64,000 - $5,200 / 12

=$58,000 / 12

=$4,900

Therefore, the amount of annual depreciation using striaghline method is $4,900

balaji rao answered 2 years ago

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