Homework Answers
Equipment cost = $20,000
Residual value = $0
Annual depreciation = [Cost - residual value] / useful life
Annual depreciation = [$20,000 - $0] / 10 =$2,000
Book value at the end of 4 years = $20,000 - (2000*4) = $12,000
After year 4, the useful life revised to next 3 years
So Annual Depreciation from there= [$12,000] / 3 = $4,000
1) Depreciation expense for the year 5 = $4,000
2) Accumulated Depreciation = $8,000 + $4,000 = $12,000
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