Explain Straight Line Depreciation Calculation?
Submitted by: Administrator(Purchase Price of Asset - Approximate Salvage Value) Estimated Useful
Life of Asset
Example: You buy a new computer for your business costing approximately
$5,000. You expect a salvage value of $200 selling parts when you dispose of it.
Accounting rules allow a maximum useful life of five years for computers. In the
past, your business has upgraded its hardware every three years, so you think
this is a more realistic estimate of useful life, since you are apt to dispose
of the computer at that time. Using that information, you would plug it into the
formula:
($5,000 purchase price - $200 approximate salvage value) 3 years estimated
useful life
The answer, $1,600, is the depreciation charges your business would take
annually if you were using the straight line method.
Submitted by: Administrator
Life of Asset
Example: You buy a new computer for your business costing approximately
$5,000. You expect a salvage value of $200 selling parts when you dispose of it.
Accounting rules allow a maximum useful life of five years for computers. In the
past, your business has upgraded its hardware every three years, so you think
this is a more realistic estimate of useful life, since you are apt to dispose
of the computer at that time. Using that information, you would plug it into the
formula:
($5,000 purchase price - $200 approximate salvage value) 3 years estimated
useful life
The answer, $1,600, is the depreciation charges your business would take
annually if you were using the straight line method.
Submitted by: Administrator
Read Online Fixed Assets Job Interview Questions And Answers
Top Fixed Assets Questions
| ☺ | What are fixed asset? |
| ☺ | What is the difference between the different depreciation methods? |
| ☺ | What is the meaning of non performing assets? |
| ☺ | What are the various means of calculating depreciation? |
| ☺ | After run depreciation i have forget calculate depreciation of one asset then how to calculate depreciation of that asset? |
Top Business and Economics Categories
| ☺ | Taxation Interview Questions. |
| ☺ | Economics Interview Questions. |
| ☺ | Accounts Receivable (AR) Interview Questions. |
| ☺ | General Ledger Interview Questions. |
| ☺ | Fixed Assets Interview Questions. |
