The correct answer is: B. the capital cost minus the salvage value, is divided by the number of years of life.
Straight-line depreciation is a method of calculating depreciation that assumes that an asset’s value will decrease evenly over its useful life. To calculate straight-line depreciation, you first need to determine the asset’s capital cost, which is the original purchase price of the asset. You then need to determine the asset’s salvage value, which is the estimated value of the asset at the end of its useful life. Finally, you divide the capital cost minus the salvage value by the number of years of life to get the annual depreciation expense.
For example, let’s say you purchase a piece of equipment for $100,000. You estimate that the equipment will have a useful life of 10 years and a salvage value of $10,000. The annual depreciation expense would be $9,000 ($100,000 – $10,000) / 10 years.
The other options are incorrect because they do not accurately reflect the straight-line depreciation method. Option A is incorrect because it does not take into account the salvage value of the asset. Option C is incorrect because it is a description of the sinking fund method of depreciation, not the straight-line method. Option D is incorrect because it is not one of the possible answers.