Question

Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years (20 points)

Determine the 1^st and 2^nd year's depreciation expense, and accounts balances reported in balance sheets using the straight-line method

b. Determine the 1^st and 2^nd year's depreciation expense, and accounts balances reported in the balance sheets using double-declining-balance method. (8points, calculation procedure counts 4 points, filling the blank counts 4 points.)

Answer 1

a)

Cost of Computer Equipment	$   57,000
Less: Salvage value	$   (9,000)
Depreciable value	$   48,000
Life of the Computer Equipment	5 Years
Depreciation per year ($48,000/5)	$     9,600
Depreciation Year 1	$     9,600
Depreciation Year 2	$     9,600

	Year 1	Year 2
Computer Equipment	$   57,000	$    57,000
Less: Accumulated depreciation	$   (9,600)	$ (19,200)
Computer Equipment (net)	$   47,400	$    37,800

b)

Year - a	Net Book value, beginning of year - b	Double declained depreciation - (c = b/Life of assets*2	Net book value, End of the year - d = b-c
Year 1	57,000	22,800	34,200
Year 2	34,200	13,680	20,520

	Year 1	Year 2
Computer Equipment	$    57,000	$    57,000
Less: Accumulated depreciation	$ (22,800)	$ (36,480)
Computer Equipment (net)	$    34,200	$    20,520

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