Homework Answers
Cost of equipment = $24,000
Residual value = $4,000
Useful life = 4 year
Annual depreciation = (Cost price - Residual value)/Useful life
= (24,000 - 4,000)/4
= 20,000/4
= $5,000
Accumulated depreciation for year 1 and year 2 = 5,000 x 2
= $10,000
| Cost of equipment | 24,000 |
| Less : Accumulated depreciation for year 1 and year 2 | -10,000 |
| Book value, end of year 2 | 14,000 |
| Less : Residual value | -2,000 |
| New depreciable cost | 12,000 |
| Remaining service life | 4 |
| Annual depreciation in year 3 to 6 (12,000/4) | $3,000 |
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a new copy machine. The new machine cost $134,000 including
installation. The company estimates the equipment will have a
residual value of $33,500. Cheetah Copy also estimates it will use
the machine for four years or about 8,000 total hours. Actual use
per year was as follows:
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