The annual depreciation for the equipment is $7,000.
Depreciation is defined in accounting as the systematic reduction of the recorded cost of a fixed asset until the asset's value is zero or inconsequential. Depreciation allows you to apply a percentage of the cost of a fixed asset to the revenue it generates.
In the given question,
Cost of the equipment = $48,000
Salvage Value = $6,000
No. of Years = 6
We know that, Under Straight-Line Method,
Depreciation = (Cost – Salvage Value)/No. of Years
= (48,000 – 6,000)/6
= $7,000
Therefore, the depreciation to be charged per year on the equipment will be $7,000.
As Straight-Line Method of depreciation is mentioned, therefore, Under Straight Line method of Depreciation, first we take the asset's acquisition price, deduct its estimated sell-on value when it is no longer anticipated to be needed, and then we have the straight-line basis. The asset's expected useful life, or useful life in accounting terms, is the sum of the number of years the asset is estimated to be useful.
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