Straight-Line Depreciation Equipment acquired at the beginning of the year at a

Question

Straight-Line Depreciation

Equipment acquired at the beginning of the year at a cost of $86,300 has an estimated residual value of $3,300 and an estimated useful life of 10 years. Determine the following:

Units-of-Output Depreciation

Equipment acquired at a cost of $140,000 has an estimated residual value of $9,500, has an estimated useful life of 45,000 hours, and was operated 3,600 hours during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places.

(a) The depreciable cost $ (b) The straight-line rate % (c) The annual straight-line depreciation $

Explanation / Answer

a) Depreciable cost = 86300-3300 = 83000

Depreciation rate = 100/10 = 10%

Annual depreciation = 83000*10% = 8300

b) Depreciation cost = 140000-9500 = 130500

Depreciation rate = 130500/45000 = 2.9 per hour

Depreciation for the year = 2.9*3600 = 10440

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