Question

Equipment with a cost of \$707.9 has an estimated residual value of \$64,400 , has an estimated useful life of 45 years, and is depreciated by the straight line method

Equipment with a cost of $707,900 has an estimated residual value of $64,400, has an estimated useful life of 45 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. 14,300 b. Determine the book value after 24 full years of use. $364,700 c. Assuming that at the start of the year 25 the remaining life is estimated to be 29 years and the residual value is estimated to be $63,100, determine the depreciation expense for each of the remaining 29 years.

Answer 1

Book value of equipment after 24 year = $364,700

revised remaining useful life = 29 year

Revised estimated residual value = $63,100

Annual depreciation expense for remaining 29 year = (Book value of equipment after 24 year - Revised estimated residual value )/revised remaining useful life

= (364,700 - 63,100)/29

= 301,600/29

= $10,400