On October 1, Year 1, Best Buy purchased an asset for $10,000, with a $2,000 estimated salvage value, and a 5-year useful life. How much is the year 1 depreciation expense using the straight-line method? Group of answer choices $525

The amount of depreciation expense for the year is $400

Explanation:

The amount of depreciation expense for the year using the Straight Line Method (SLM) as:

Depreciation expense = Asset cost - Salvage value / Number of years of useful life * Portion of year that will be expensed

where

Assets cost is $10,000

Salvage value is $2,000

Number of years of useful life is 5 years

Portion of year that will be expensed is 3 months / 12 (For 3 months from October to December)

Putting the values above:

Depreciation expense = $10,000 - $2,000 / 5 * 3/12

= $8,000 / 5 * 3/12

= $1,600 * 3/12

= $400

Therefore, the amount of depreciation expense for the year using the Straight Line Method (SLM) amounts to $400