A laser surgical tool has a cost basis of $100,000 and a five-year depreciable life. The estimated SV of the laser is $20,000 at the end of five years. Determine the annual depreciation amounts using the SL method.

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Gunnar Hobbs

27 August, 03:01

A laser surgical tool has a cost basis of $100,000 and a five-year depreciable life. The estimated SV of the laser is $20,000 at the end of five years. Determine the annual depreciation amounts using the SL method.

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Landen Wilkerson · Answer 1

The annual depreciation under SL is $16000 per year.

Explanation:

The depreciation expense under Straight Line (SL) method remains constant throughout an asset's useful life. The depreciation under straight line method is calculated by calculating the value of the asset that is eligible for depreciation, which is its cost less the salvage value (SV) and dividing it by the asset's useful life.

The straight line depreciation per year = (Cost - SV) / estimated useful life

Annual depreciation under SL = (100000 - 20000) / 5 = $16000 per year