Question

Newlech purchases computer equipment for $268,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $30,000. Exercise 8-7 Straight-line depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.

Answer 1

Solution

Depreciation schedule-Straight line method
Year	Book Value	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$        268,000.00	$             59,500.00	$             59,500.00	$            208,500.00
2	$        208,500.00	$             59,500.00	$           119,000.00	$            149,000.00
3	$        149,000.00	$             59,500.00	$           178,500.00	$              89,500.00
4	$          89,500.00	$             59,500.00	$           238,000.00	$              30,000.00

Working

Straight line Method
A	Cost	$ 268,000
B	Residual Value	$ 30,000
C=A - B	Depreciable base	$ 238,000
D	Life [in years left ]	4
E=C/D	Annual SLM depreciation	$ 59,500