Question

Take me to the text On December 1, 2019, Rite-Path Consulting purchased new computers for $15,980. The computers are expected to last 3 years and will have an estimated residual value of $500. Rite-Path Consulting has a December 31 year end. Required Prepare the table below showing the yearly depreciation, accumulated depreciation, and net book value of the equipment. Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number Year Original Cost of Equipment Depreciation Expense Accumulated Depreciation Net Book Value

Answer 1

Straight Line Method of Depreciation - Under straight line method of depreciation, the cost of the asset is written off uniformly throughout the useful life of the asset. An equal amount of depreciation is charged every year throughout the useful life of the asset untill the value of the asset becomes nil or equal to its residual value.

Formula: Straight line depreciation = ( Cost of the asset - Net Residual value)/Useful life of the asset

Net book value of the aseet - It is the amount at which the organization records the assets in the accounting records.It is calculated as Cost if the asset less accumulated depreciation.

Accumulated Depreciation - It is the cumulative depreciation upto a single point of life.It is the sum of the depreciation charged on the asset during its life.

Solution part

Year Original Cost Depreciation Accumulated Net Book

of Equipment Expense Depreciation Value

2019 $15,980 $430 $430 $15,550

2020 $15,980 $5,160 $5,590 $10,390

2021 $15,980 $5,160 $10,750 $5,230

2022 $15,980 $4,730 $15,480 $500

Calculations and Explanantions

Given:Cost of the asset = $15,980

Useful life. = 3years

Residual Value = $500

Rite-path consulting has year 31 December year end

For year 2019, the computers has been purchased on December 1,2019 which means the computers has been used for the month of december only and therefore the depreciations will be charged for one month only in the year 2019.

Depreciation expense for year 2019 = [($15,980 - $500)/3years]× 1month/12months = $430

For year 2020, since the computers has been used for the whole year, depreciation will be charged for the whole year.

Depreciation expense for the year 2020 = ($15,980 - $500)/3years = $5,160

For year 2021, since the computers has been used for the whole year, depreciation will be charged for the whole year.

Depreciation expense for the year 2021 = ($15,980 - $500)/3years = $5,160

For year 2022, since the computers has the useful life of 3years and it has been used for 2years and 1month the asset has the remaining useful life of 11months in year 2022. Therefore the depreciation will be charged for 11months i.e.upto 30 November.

Depreciation expense for the year 2022 = [($15,980 - $500)/3years] × 11months/12months = $4,730