Revision of Depreciation quipment with a cost of $952,600 has an estimated resid

Question

Revision of Depreciation quipment with a cost of $952,600 has an estimated residual value of $109,600, has an estimated useful life of 30 years, and is depreciated by the straight-line method . Determine the amount of the annual depreciation. 28,100 Determine the book value after 18 full years of use. 446,800 . Assuming that at the start of the year 19 the remaining life is estimated to be 16 years and the residual value is estimated to be $109,200, determine the depreciation expense for each of the remaining 16 years. 19,343.7

Explanation / Answer

a. Amount of Annual Depreciation = (Cost - Salvage) / Useful Life

Amount of Annual Depreciation = ($952600 - $109600) / 30

Amount of Annual Depreciation = ($843000) / 30 = $28100

b. Book Value after 18 years full use = Cost - 18 Years * Annual Depreciation

Book Value after 18 years full use = $952600 - 18 Years * $28100

Book Value after 18 years full use = $952600 - $505800

Book Value after 18 years full use = $446800

c. Depreciation Expense accounting increase in life of asset = Cost - Accumulated Depreciation - Salvage / Remaining Useful Life

Depreciation expense accounting increase in life of asset = $446800 - $109600 / 16

Depreciation Expense accounting increase in life of asset = $21075

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