Please help! Its urgent! I keep getting 2.75 An oil company is buying a semi-submersible oil...

Question

Question

Please help! Its urgent!

I keep getting 2.75

Answer 1

Answer #1

Option (B) is correct

Answer is $2.75m. Due to rounding off, we can take it $2.8m.

Under the straight line method, depreciation is calculated by the following formula:

Depreciation = Cost - Residual value / Useful life

Cost = $15 + $1.5 = $6.5m, Residual value = $0, useful life = 6

Depreciation = ($6.5 - $0) / 6 = 2.75

Under straight line method, depreciation remains the same for every year. So yearly depreciation expense is $2.75 or $2.8m.

Answer 2

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