Question

E3. Carlson purchased Equipment for $56,000 with salvage value $7,000 and a 10-year life. Carlson used the asset for four years, straight line, but it was apparent that the Equipment would last only 4 more years. 1. What was the book value of the Equipment after 4 years? $. 2. What will be the depreciation expense in each of the remaining 4 years?$ Hint: take the remaining book value, subtract salvage value, and divide by remaining life. E4. Partial Year Depreciation--STRAIGHT LINE Tumwater purchased a truck for $38,000 on 07/01/15 with salvage value of $8,000 and useful life of 4 years. SL Depreciation is recorded on 12/31 each year to nearest whole dollar. What is the depreciation expense for year 1? What is the depreciation expense for year 2? Show your work!

Answer 1

Please find below table useful to compute desired results: -

А 1 Cost of Equipment 56000 2 Salvage Value 7000 3 Useful life in years 10 4 Remaining useful life 5 Annual Depreciation =(B1-B2)/B3 6 Book value of Equipment after 4 years =B1-B5*4 7 Depreciation expense for remaining 4 years =(B6-B2)/B4 38000 8000 9 Cost of Truck 10 Salvage Value 11 Useful life in years 12 Annual Depreciation 13 Depreciation expense for Year 1 14 Depreciation expense for Year 2 =(B9-B10) B11 =B12*6/12 =B12

End results would be as follows: -

B 56,000 7,000 А 1 Cost of Equipment 2 Salvage Value 3 Useful life in years 4 Remaining useful life 5 Annual Depreciation 6 Book value of Equipment after 4 years 7 Depreciation expense for remaining 4 years 4,900 36,400 7,350 38,000 8,000 9 Cost of Truck 10 Salvage Value 11 Useful life in years 12 Annual Depreciation 13 Depreciation expense for Year 1 14 Depreciation expense for Year 2 7,500 3,750 7,500