At the beginning of the fiscal year, Borland company acquired new equipment at a

Question

At the beginning of the fiscal year, Borland company acquired new equipment
at a cost of $65,000. The equipment has an estimated life of five years and an estimated salvage value of $5,000.

A.) Using the Straight-line method, determine the annual depreciation for each of the five years of estimated useful life of the equipment, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year.

B.) Using the Declining-balance method, determine the annual depreciation for each of the five years of estimated useful life of the equipment, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year.

Explanation / Answer

a) Annual Depreciation = (Cost of equipment -salvage value)/ life time annual depreciation = (65,000-5000)/5 = $12,000 End of year 1 Accumulated depreciation = $12,000 Book Value = $53,000 End of year 2 Accumulated depreciation = $24,000 Book Value = $41,000 End of year 3 Accumulated depreciation = $36,000 Book Value = $29,000 End of year 4 Accumulated depreciation = $48,000 Book Value = $17,000 End of year 5 Accumulated depreciation = $60,000 Book Value = $5,000

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