Compute annual depreciation using straight-line method for cost C, salvage S, life n.

• A. C/n
• B. (C + S)/n
• C. (C − S)/n
• D. (C − S) × n

Answer: (C)

Straight-line depreciation allocates the loss in value evenly over the asset’s life. You start with the purchase cost C and expect to recover a salvage value S at the end of its n-year life. The total amount depreciated over the entire life is C minus S. Dividing that evenly by n yields the annual depreciation: (C − S) / n. This approach makes the asset’s book value decrease by the same amount each year, moving from C in year one toward S after year n.

For example, if C = 1000, S = 100, and n = 5, the annual depreciation is (1000 − 100) / 5 = 180. After year 1 the book value is 820, after year 2 it’s 640, and after year 5 it equals the salvage 100.

Why the other forms don’t fit: using C/n ignores salvage, effectively assuming S = 0; using (C + S)/n would imply adding salvage value to the cost rather than deducting it; using (C − S) × n would give the total depreciation over the life (and would not leave the asset at S after n years) rather than the annual amount.