What is the annual depreciation cost if an oven purchased for $10,000 has a salvage value of $3,000 after 10 years?

To determine the annual depreciation cost of the oven, the straight-line method of depreciation can be applied. This method calculates depreciation by taking the initial cost of the asset, subtracting its salvage value, and dividing by the useful life of the asset.

In this scenario, the oven was purchased for $10,000 and has a salvage value of $3,000 after 10 years. The calculation for annual depreciation would be as follows:

1. Calculate the total depreciation over the useful life:

Total Depreciation = Initial Cost - Salvage Value

Total Depreciation = $10,000 - $3,000 = $7,000

2. Now, divide this total depreciation by the useful life in years:

Annual Depreciation = Total Depreciation / Useful Life

Annual Depreciation = $7,000 / 10 years = $700

Thus, the annual depreciation cost for the oven is correctly identified as $700.