Question

A new barcode reading device has an installed cost basis of $23,360 and an estimated service life of eleven years. It will have a zero salvage value at that time. The 150% declining balance method is used to depreciate this asset. a. What will the depreciation charge be in year eleven? b. What is the book value at the end of year ten? c. What is the gain (or loss) on the disposal of the device if it is sold for $4,400 after ten years? a. The depreciation charge in year eleven will be $ - (Round to the nearest dollar.) b. The book value at the end of year ten is $ . (Round to the nearest dollar.) C. The V on the disposal of the device if it is sold for $4,400 after ten years is $ (Round to the nearest dollar.)

Answer 1

The 150% depreciation rate = 1.5 / N = 1.5 / 11 = 0.1364

The depreciation schedule is given below:

Depreciation Amount($) End of the year = 0.1364 * Previous year book value 00u WNEO 3186 2752 2376 2052 1772 1531 1322 1141 986 851 5390 Book Value ($) = Previous year book value - Current year depreciation amount 23360 20174 17422 15046 12993 11221 9691 8369 7227 6241 5390 0 10 11

a) Ans: $5,390

b) Ans: $5,390

c) Answer to blank 1: Loss

    Answer to blank 2: $990               [i.e., 5390 - 4400]