In early January 2015, NewTech purchases computer equipment for $154,000 to use
ID: 2519055 • Letter: I
Question
In early January 2015, NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming double-declining- balance depreciation. Depreciation for the Period End of Period Beginning-Year DepreciationAnnual Accumulated Year-End Year Book Value Hate Depreciation Depreciation Book Value 2015 2016 2017 2018 Total 154,000 77,000 38,500 5096 50% 50% 50% $ 77,000 38,500 $115,500
Explanation / Answer
Depreciation for the Period End of Period Year Beginning Year Book Value Depreciation Rate Annual Depreciation Accumulated Depreciation Year End Book Value 2015 154000 50% 77000 77000 77000 2016 77000 50% 38500 115500 38500 2017 38500 50% 13500 129000 25000 2018 50% 0 129000 25000 129000 Maximum allowable Depreciation = Asset cost- Salvage value Maximum allowable Depreciation = $154,000-25000 =$129,000 In year 2017 Maximum allowable Depreciation is 13,500 (129,000-115,500)