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A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be $1000. What is the annual amount of deprecation using straight line method of depreciation?
- a)$1000
- b)$2000
- c)$3000
- d)$3300
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
A company purchased a vehicle for $6000. I will be used for 5 years an...
- The correct option is A, Rs 1000
- Depreciation= Rs 6000 - Rs 1000 = Rs 5000/5 = Rs 1000.
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A company purchased a vehicle for $6000. I will be used for 5 years an...
The straight-line method of depreciation is a commonly used method to allocate the cost of an asset evenly over its useful life. In this case, the company purchased a vehicle for $6000 and expects to use it for 5 years, with a residual value of $1000 at the end of its useful life. To calculate the annual amount of depreciation, we can use the following formula:
Annual Depreciation = (Cost - Residual Value) / Useful Life
Let's break down the calculation:
Cost of the vehicle = $6000
Residual value = $1000
Useful life = 5 years
Using the formula, we can calculate the annual depreciation:
Annual Depreciation = ($6000 - $1000) / 5
= $5000 / 5
= $1000
Therefore, the annual amount of depreciation using the straight-line method is $1000.
Explanation:
- The straight-line method of depreciation evenly distributes the cost of an asset over its useful life.
- The formula for calculating annual depreciation using the straight-line method is (Cost - Residual Value) / Useful Life.
- In this case, the cost of the vehicle is $6000, the residual value is $1000, and the useful life is 5 years.
- Plugging these values into the formula, we get ($6000 - $1000) / 5 = $1000.
- This means that the company can expect to depreciate $1000 of the vehicle's value each year for 5 years.
- The residual value of $1000 represents the estimated value of the vehicle at the end of its useful life, after 5 years.
- By subtracting the residual value from the cost and dividing by the useful life, we can determine the annual depreciation amount.
- The answer is option 'A', $1000.
Annual Depreciation = (Cost - Residual Value) / Useful Life
Let's break down the calculation:
Cost of the vehicle = $6000
Residual value = $1000
Useful life = 5 years
Using the formula, we can calculate the annual depreciation:
Annual Depreciation = ($6000 - $1000) / 5
= $5000 / 5
= $1000
Therefore, the annual amount of depreciation using the straight-line method is $1000.
Explanation:
- The straight-line method of depreciation evenly distributes the cost of an asset over its useful life.
- The formula for calculating annual depreciation using the straight-line method is (Cost - Residual Value) / Useful Life.
- In this case, the cost of the vehicle is $6000, the residual value is $1000, and the useful life is 5 years.
- Plugging these values into the formula, we get ($6000 - $1000) / 5 = $1000.
- This means that the company can expect to depreciate $1000 of the vehicle's value each year for 5 years.
- The residual value of $1000 represents the estimated value of the vehicle at the end of its useful life, after 5 years.
- By subtracting the residual value from the cost and dividing by the useful life, we can determine the annual depreciation amount.
- The answer is option 'A', $1000.
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A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be $1000. What is the annual amount of deprecation using straight line method of depreciation?a)$1000b)$2000c)$3000d)$3300Correct answer is option 'A'. Can you explain this answer?
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A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be $1000. What is the annual amount of deprecation using straight line method of depreciation?a)$1000b)$2000c)$3000d)$3300Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be $1000. What is the annual amount of deprecation using straight line method of depreciation?a)$1000b)$2000c)$3000d)$3300Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be $1000. What is the annual amount of deprecation using straight line method of depreciation?a)$1000b)$2000c)$3000d)$3300Correct answer is option 'A'. Can you explain this answer?.
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