WAEC Accounting 2024 Paper

Concept:The straight-line method charges the same amount of depreciation every year over an asset’s useful life.Explanation:Annual depreciation is calculated using the formula:$$\text{Annual depreciation}=\frac{\text{Cost of asset} - \text{Scrap value}}{\text{Estimated useful life}}$$The cost of the asset is the original amount paid to acquire it.Scrap value is the expected amount to be recovered when the asset is disposed of at the end of its useful life.The estimated useful life is the number of years the asset is expected to be used.After deducting scrap value from cost, the remaining amount is spread equally over the estimated useful life.Therefore, the denominator in the straight-line formula is the estimated useful life of the asset.Answer:The correct option is C. estimated useful life of the asset.$$\text{Annual depreciation}=\frac{\text{Cost of asset}-\text{Scrap value}}{\text{Estimated useful life}}$$