Using a straight line depreciation schedule, at what amount is the company depreciating it’s equipment if the cost of the equipment is $45,000 and it has a residual value of $5,000 with a useful life of 4 years?

To find the annual depreciation expense using the straight-line depreciation method, we can apply the formula:

\[
\text{Annual Depreciation Expense} = \frac{\text{Cost of Equipment} - \text{Residual Value}}{\text{Useful Life}}
\]

Given:
- **Cost of Equipment** = $45,000
- **Residual Value** = $5,000
- **Useful Life** = 4 years

Substituting these values:

\[
\text{Annual Depreciation Expense} = \frac{45,000 - 5,000}{4} = \frac{40,000}{4} = 10,000
\]

### Answer:
The company is depreciating its equipment at **$10,000 per year**.

Would you like further details, or do you have any questions?

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Here are some additional questions for deeper understanding:
1. How would the depreciation expense change if the useful life were extended to 6 years?
2. What would the annual depreciation be if the equipment’s residual value were $3,000 instead?
3. How is straight-line depreciation different from declining balance depreciation?
4. If the equipment were sold after 3 years, what would its book value be at that time?
5. How would a change in residual value impact the overall depreciation cost?

**Tip:** The straight-line method spreads the depreciation expense evenly over the asset's useful life, making it a popular choice for assets with consistent usage.

Using a straight line depreciation schedule, at what amount is the company depreciating its equipment if the cost of the equipment is $45,000 and it has a residual value of $5,000 with a useful life of 4 years?

Learn how to calculate straight-line depreciation for equipment with a cost of $45,000, a residual value of $5,000, and a useful life of 4 years. This guide walks through the step-by-step solution to determine an annual depreciation expense of $10,000, ideal for high school accounting and finance students.

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