Depreciation Questions Straight Line – With Salvage

Question 1

1. Diggers Inc. bought a new backhoe for $100,000. After 5 years, the salvage value was $10,000. How much was depreciated each year? Assume straight line depreciation.

A. $10,000
B. $12,000
C. $18,000
D. $20,000

Answer 1

1. C
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   100,000 -10,000 = 90,000
   (Depreciable total ÷ years of depreciation = depreciation per year)
   90,000 ÷ 5 = 18,000

Question 2

2. ABC Paints bought a new truck for $25,000. After 5 years, the salvage value was $5,000. How much was total depreciation in years 2 and 3? Assume straight line depreciation.

A. $2,000
B. $8,000
C. $9,200
D. $10,250

Answer 2

2. B
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   25,000 -5,000 = 20,000
   (Depreciable total ÷ years of depreciation = depreciation per year) 20,000 ÷ 5 = 4,000
   4,000 x 2 = 8,000 (Years 2 and 3, totaled)

Question 3

3. Joe’s Landscaping bought a new truck for $65,000. After 5 years, the salvage value was $5,000. What was the total depreciation? Assume straight line depreciation.

A. $60,000
B. $62,000
C. $72,000
D. $76,000

Answer 3

3. A (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   65,000 -5,000 = 60,000

Question 4

4. Super Builders, LLC bought a new crane for $350,000. After 7 years, the salvage value was $30,000. How much was depreciated each year? Assume straight line depreciation.

A. $42,890
B. $45,714
C. $46,209
D. $46,248

Answer 4

4. B
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   350,000 - 30,000 = 320,000
   (Depreciable total ÷ years of depreciation = depreciation per year)
   320,000 ÷ 7 = 45,714

Question 5

5. Cloud Airlines bought a new airplane for $520,000. After 10 years, the salvage value was $100,000. What was the total amount depreciated in years 1 and 2? Assume straight line depreciation.

A. $84,000
B. $144,000
C. $168,000
D. $198,000

Answer 5

5. A
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   520,000 – 100,000 = 420,000
   (Depreciable total ÷ years of depreciation = depreciation per year) 520,000 is Cost Basis or
   Purchase Price or Depreciable Total 420,000 ÷ 10 = 42,000
   42,000 x 2 = 84,000 (Years 1 and 2, totaled)

Question 6

6. Blackbeard Salvage bought a new boat for $212,000. After 7 years, the salvage value was $14,000. How much was depreciated in year 1? Assume straight line depreciation.

A. $19,400
B. $22,080
C. $27,560
D. $28,286

Answer 6

6. D
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   212,000 - 14,000 = 198,000
   (Depreciable total ÷ years of depreciation = depreciation per year)
   198,000 ÷ 7 = 28,286

Question 7

7. Deadwood Lumber bought a new truck for 94,000. After 5 years, the salvage value was $12,000. How much was depreciated each year? Assume straight line depreciation.

A. $16,000
B. $16,400
C. $17,000
D. $18,600

Answer 7

7. B
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   94,000 - 12,000 = 82,000
   (Depreciable total ÷ years of depreciation = depreciation per year)
   82,000 ÷ 5 = 16,400

Question 8

8. Northern Snowtown bought a new snow maker for $108,000. After 5 years, the salvage value was $5,000. How much was depreciated in year 5? Assume straight line depreciation.

A. $20,600
B. $21,400
C. $22,010
D. $28,200

Answer 8

8. A
   (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   108,000 - 5,000 = 103,000
   (Depreciable total ÷ years of depreciation = depreciation per year)
   103,000 ÷ 5 = 20,600

Question 9

9. Yellow Inc. bought a new school bus for $180,000. After 5 years, the salvage value was $20,000. How much was depreciated in total for all years? Assume straight line depreciation.

A. $150,000
B. $160,000
C. $170,000
D. $180,000

Answer 9

9. B (Cost Basis/Purchase Price – Salvage value = Depreciable total)
   Answer B: 180,000 - 20,000 = 160,000

Question 10

10. Private Orbits Inc. bought a new rocket for $4,000,000. After 5 years, the salvage value was $400,000. How much was depreciated each year? Assume straight line depreciation.

A. $720,000
B. $800,000
C. $980,000
D. $1,000,000

Answer 10

10. A
    (Cost Basis/Purchase Price – Salvage value = Depreciable total)
    4,000,000 - 400,000 = 3,600,000
    (Depreciable total ÷ years of depreciation = depreciation per year)
    3,600,000 ÷ 5 = 720,000