Homework Answers
Ans :
Depreciation under SLM method is calculated using following formula
Depreciation expense = (C-S) / L
C = Cost of the asset = $ 600,000
S = Salvage value = $ 40,000
L = Life of the asset = 8 years
Substitute all the above data in the formula.
Depreciation expense = (C-S) / L
Depreciation expense per year = ( $ 600,000 - $ 40,000) / 8 years
= ( $ 560,000) / 8
= $ 70,000.
Annual depreciation expense = $ 70,000
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