Question 11 pts XYZ Enterprises purchased equipment for $70,000 on January 1, 20

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Question 11 pts

XYZ Enterprises purchased equipment for $70,000 on January 1, 2015. The equipment is expected to have a five-year life and a residual value of $10,000. Using the straight-line method, XYZ’s Depreciation Expense for 2015 would be (omit $ and , in the answer):

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Question 21 pts

XYZ Enterprises purchased equipment for $70,000 on January 1, 2015. The equipment is expected to have a five-year life and a residual value of $10,000. Using the straight-line method, the Accumulated Depreciation on XYZ's equipment at the end of2016 would be (omit $ and , in the answer):

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Question 31 pts

XYZ Enterprises purchased equipment for $70,000 on January 1, 2015. The equipment is expected to have a five-year life and a residual value of $10,000. Using the straight-line method, the Net Book Value of XYZ’s equipment at the end of 2017 would be (omit $ and , in the answer):

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Question 41 pts

XYZ Enterprises purchased equipment for $70,000 on January 1, 2015. The equipment is expected to have a five-year life and a residual value of $10,000. Using the double-declining balance method, XYZ’s Depreciation Expense for 2015 would be (omit $ and , in the answer):

Explanation / Answer

1) Depreciation expense per year

= (cost of the asset - salvage value) / useful life

= ($70000 - $10000) / 5 = $12000

Depreciation expensefor year 2015 = $12000

2)

Depreciation per year under straight line method = $12000

For two years accumulated depreciation = $12000 x 2 = $24000

Accumulated depreciation at the end of 2016 = $24000

3)

Accumulated depreciation at the end of the year 2017 = 3 x $12000 = $36000

Book value at the end of 2017 = cost - accumulated depreciation = $70000 - $36000 = $34000

4)

Straight line rate of depreciation = 1/useful life of the asset = 1/5 = 0.20 = 20%

double declining rate of depreciation = 2 x 20% = 40%

The depreciation expense for the year 2015 = 40% x $70000 = $28000

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