What will be the annual depreciation percentage for an asset with a 15-year life under the straight-line method?

What will be the annual depreciation percentage for an asset with a 15-year life under the straight-line method?

• A. 6.67%
• B. 5%
• C. 7.5%
• D. 8.33%

Answer: (A)

To determine the annual depreciation percentage for an asset using the straight-line method, you start by understanding how this method works. The straight-line method essentially spreads the cost of the asset evenly over its useful life. For an asset with a useful life of 15 years, the formula to calculate annual depreciation percentage is: \[ \text{Annual Depreciation Percentage} = \frac{100\%}{\text{Useful Life}} \] Plugging in the lifespan of 15 years, the calculation would be: \[ \text{Annual Depreciation Percentage} = \frac{100\%}{15} \approx 6.67\% \] This means that every year, under the straight-line method, the asset will depreciate by approximately 6.67% of its original value. This approach is straightforward and is widely used for its simplicity and ease of calculation, making it a common choice in accounting for financial reporting purposes. The other percentages presented do not correspond to the results of the straight-line depreciation calculation for this specific lifespan, thus reinforcing that 6.67% is indeed the correct answer.

To determine the annual depreciation percentage for an asset using the straight-line method, you start by understanding how this method works. The straight-line method essentially spreads the cost of the asset evenly over its useful life.

For an asset with a useful life of 15 years, the formula to calculate annual depreciation percentage is:

[ \text{Annual Depreciation Percentage} = \frac{100%}{\text{Useful Life}} ]

Plugging in the lifespan of 15 years, the calculation would be:

[ \text{Annual Depreciation Percentage} = \frac{100%}{15} \approx 6.67% ]

This means that every year, under the straight-line method, the asset will depreciate by approximately 6.67% of its original value. This approach is straightforward and is widely used for its simplicity and ease of calculation, making it a common choice in accounting for financial reporting purposes.

The other percentages presented do not correspond to the results of the straight-line depreciation calculation for this specific lifespan, thus reinforcing that 6.67% is indeed the correct answer.