Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

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Using the straight-line depreciation method, what is the depreciation in Year 1 for a $1200 asset with a $200 salvage value over a 5-year period?

$200
$333
$400
$240

The correct answer is: $200

To determine the depreciation expense for Year 1 using the straight-line method, you need to first calculate the annual depreciation amount. The straight-line depreciation method allocates the cost of an asset evenly over its useful life. Here’s how to calculate it: 1. **Identify the initial cost of the asset**: In this case, the asset costs $1200. 2. **Determine the salvage value**: The asset has a salvage value of $200, which is the estimated residual value at the end of its useful life. 3. **Calculate the depreciable amount**: This is done by subtracting the salvage value from the initial cost: - Depreciable amount = Initial cost - Salvage value - Depreciable amount = $1200 - $200 = $1000 4. **Determine the useful life of the asset**: The asset is set to be used over a period of 5 years. 5. **Calculate the annual depreciation**: Divide the depreciable amount by the useful life: - Annual depreciation = Depreciable amount / Useful life - Annual depreciation = $1000 / 5 = $200. Thus, the depreciation expense for Year 1 is $200