Straight-Line Depreciation Calculation

What is the depreciation expense for year 2 under straight-line depreciation?

a. $80000.

b. $20000.

c. $40000.

d. $44000.

Answer:

Year 2 depreciation= $16,000

Correct answer is not among the options

Explanation:

Using the straight line depreciation method we have that

Annual Depreciation = (Purchase cost - Salvage value) / useful life

= ($80,000 - $16,000) / 4

= $64,000 / 4

= $16,000

If Annual depreciation is $16,000, then the Depreciation expense for year 2 is also $16,000.