year | depreciation expense | accumulated deprecition |
2015 | 18,000 | 18,000 |
2016 | 18,000 | 36,000 |
2017 | 14,400 | 50,400 |
2018 | 14,400 | 64,800 |
2019 | 14,400 | 79,200 |
2020 | 17,900 | 97,100 |
2021 | 17,900 | 115,000. |
working:
annual depreciation during 2015 and 2016.
=> (cost - salvage value ) / life in years
=> ($120,000 - $12,000) / 6 years
=>$18,000.
annual depreciation during 2017,2018,2019.
(book value - salvage value) / remaining life.
here,
book value = cost - accumulated depreciation till 2016
=>120,000 - 36,000
=>84,000.
now,
depreciation for given years
=>(84,000 - 12,000) / 5 years..................(7 years revised life - 2 years expired till 2016).
=>$14,400..
depreciation for 2020 and 2021.
(book value - salvage value) / years remaining
here,
book value =120,000 - 79,200 accumulated depreciation
=>$40,800.
salvage value = 5000
years remaining =2.
so annual depreciation during 2020 and 2021
=(40,800-5,000)/2
=>$17,900
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