Question

Nn Browser + Webcam On July 1 year 1. ABC. Ud. purchased a piece of equipment for $3200 dus Installation costs of $45000 that were necessary to make the equipment operational. ABC.Ld. has a December 31, fiscal year end and was the stritt Vine depreciation method. The piece of equipment is expected to have a tutte of 18 years at which ime it will have a residual valued 2000. What is the book value of the equipment as of December 31. year 4 Pound your uswer to the nearest dollar, Your Answer: Answer

Answer 1

According to the Straight line method, the cost of the asset is written off equally during its useful life. Therefore, an equal amount of depreciation is charged every year throughout the useful life of an asset. After the useful life of the asset, its value becomes nil or equal to its residual value. Thus, this method is also called Fixed Installment Method or Fixed percentage on original cost method.

Date Year 1 Equipment to Particulars Amant Date Particulars Anom Dec 31 By Depriciation 9305 Ald: Installation: 45000 3,65000 Dec 31 By Balance a/d 355695 way' do Bank 320.00 3,65,00 O 13,65000 Year T Jan I To Balance bld 355 695 Dec 31 By Depriciation 18611 By Dec 31 Balance Od 337084 355695 355695 Vear TV Jan 1 Year TV an I To balance bld 337084 Dec 31 By Depriciation 18611 Dec 31 By Balance Balance 6d 318 473 337084 3,37084 to Balance bold 318 473 Dec 31 By Repriciation 18611 DUL 31 By Balance 5/2, 299862 318473 318473 Year I on I To balance bld 299862. Moty working 365,000 - 30000 18611 per r year since we have bought the machine in July so depriciation will be charged for the remaining months of year 1. 18611 X6 9305. 12