Using the straight-line method, the company should report annual depreciation for the equipment of $4,200.
Given,
A company buys equipment for $48,000 expects to use it for ten years, and then sell it for $6,000
The formula to calculate annual depreciation is given below-
Annual depreciation = (Original cost - salvage value) / Estimated life(years)
Annual depreciation = ($48,000 - $6,000) / 10
Thus, annual depreciation = $4,200
A standard yearly rate at which depreciation is charged to a fixed asset is called annual depreciation. Thus, to calculated depreciation the straight-line method is used. Where you need to subtract the asset's salvage value from its cost.
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