Practice Straight Line Method (slm) (18.5.1) - Depreciation Accounting

Practice: Straight Line Method (SLM)

Lesson 18.5.1Depreciation Accounting

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8 questions

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6 sample questions

Question 1.
Calculate the annual depreciation for an asset costing $12,000 with a residual value of $2,000 and a useful life of 10 years.
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Use the SLM formula: (Cost - Residual) / Useful Life.
Question 2.
If an asset's cost is $15,000 and it has a residual value of $1,500 over a useful life of 5 years, what is its annual depreciation?
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Remember the formula!
3Question 3.
What does the Straight Line Method calculate?
- Total value of an asset
- Annual depreciation
- Cash flow from an asset
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Think about how we spread costs each year.
4Question 4.
True or False: The residual value contributes positively to the depreciation calculation in SLM.
- True
- False
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Remember how we derive the annual depreciation.
Question 5.
A business acquires a vehicle for $40,000. It estimates the vehicle will have a residual value of $4,000 after 8 years. Calculate the annual depreciation using SLM. Now, what implications does this have if the vehicle is primarily used for long-distance transportation?
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Use the SLM formula.
Question 6.
If a company updates its asset schedule to include additional years or a higher residual value for an asset, how would that affect the SLM calculation for depreciation? Calculate using an original asset cost of $60,000, with a new estimated residual value of $6,000 over a useful life of 12 years instead of 10.
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Re-evaluate the values and apply the SLM formula.

4 more questions in this section. Enroll free to practise them all.