Homework Answers
a) $9000
depreciation expense for the year ending 31 december 2020 is the depreciation charge for 1 year
depreciation expense=(cost-salvage value)/expected life
cost=purchase cost + transportation and installation cost
cost=$38000+$2000=$40000
salvage value=$4000
expected life 4 years
depreciation expense=($40000-$4000)/4=$9000 per year
depreciation expense for the year ending 31 december 2020 is $9000.as it is purchased on 1 january 2020.therefore 1 year depreciation expense is charged.
| depreciation | accumulated depreciation | |
| year 1-2020 | 9000 | 9000 |
| year 2-2021 | 9000 | 18000 |
| year 3-2022 | 9000 | 27000 |
| year 4-2023 | 9000 | 36000 |
b) $18000
accumulated depreciation expense balance as of 31 december 2021
from the date of purchase 1 january 2020 to the date of 31 december 2021,it is exact 2 years.each year it is charged a depreciation expense of $9000.so the accumulated depreciation charge will be $18000 ($9000*2).
c) $13000
net book value=cost-accumulated depreciation
net book value at 31 december =$40000-$27000=$13000
accumulated depreciation at year ending 31 december is $27000 (3*$9000).check the table above.
d) $4500
if the equipment was bought on july 1, 2020 the depreciation charge would be allocated for only 6 months. 1 july 2020 to 31 december 2020 is a 6 months period.
the depreciation expense on the year ending 31 december 2020 = $9000*(6/12)=$4500
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