Chapter 9, Problem 9.4BE

To determine

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

$\text{Depreciation cost = }\frac{\left(\text{Original cost of the asset-Salvage value}\right)}{\text{Estimated useful life of the asset}}$

To state: Whether not charging depreciation on the estimated cost of the land is ethical