Which formula is used for calculating straight-line depreciation if economic life is not provided?

The appropriate formula for calculating straight-line depreciation when the economic life is not specified is derived from understanding that straight-line depreciation is designed to allocate the cost of an asset evenly over its useful life. This method assumes that an asset will depreciate evenly each year until it reaches its residual value at the end of its economic life.

The correct formula is essentially found in option A: (Cost - residual value) / useful life of asset. This formula accurately represents the method for calculating depreciation by subtracting the estimated residual value from the cost of the asset and dividing by the useful life of the asset to determine the annual depreciation expense.

Options B, C, and D do not conform to the definition of straight-line depreciation. While option B suggests multiplying the cost minus the residual value by a percentage, this does not provide a consistent annual depreciation figure based on the asset's life. Option C incorrectly suggests adding the residual value and cost and multiplying by a percentage, which does not relate to how straight-line depreciation is calculated. Option D implies a division of a sum involving weeks and cost, which lacks the fundamental elements needed for calculating depreciation correctly.

Understanding straight-line depreciation is crucial for accurate financial reporting, and using the correct formula ensures that the expense is systematically allocated,