Question

Revision of Depreciation

Equipment with a cost of $572,200 has an estimated residual value of $52,000, has an estimated useful life of 18 years, and is depreciated by the straight-line method.

a. Determine the amount of the annual depreciation.
$

b. Determine the book value after 8 full years of use.
$

c. Assuming that at the start of the year 9 the remaining life is estimated to be 16 years and the residual value is estimated to be $56,200, determine the depreciation expense for each of the remaining 16 years.
$

Answer 1

rate positively ..

Ans a)	Determine the amount of the annual depreciation.
	Cost =	$        572,200
	Residual value =	$        (52,000)
	Depreciable value	$        520,200
	Useful life	$                 18
	Annual depreciation	$          28,900
	Ans =	$          28,900
Ans b)	Determine the book value after 8 full years of use
	Cost =	$        572,200
	8 year depreciation =	$        231,200
	Book value after 8 year =	$        341,000
Ans c)
	Book value at 9th year beginning	$        341,000
	Less: residual value	$          56,200
	Remaining depreciable cost=	$        284,800
	Remaning useful life =16-9	7
	Annual depreciation	$     40,685.71
	Each year depreciation =	$     40,685.71