Calculating Depreciation Expense: For each plant asset, 1. Calculate the amount

Question

Calculating Depreciation Expense:

For each plant asset,
1. Calculate the amount to be depreciated.
2. Calculate the annual depreciation expense using the straight-line method.
3. Calculate the depreciation expense for the first year.

Plant assets Months owned first year Original cost Estimated disposal value Estimated useful life Cash register 8 $450 $30 7 years Computer 2 $6,500 $1,500 5 years Conference table 6 $1,900 $100 25 years Delivery truck 3 $36,400 $6,400 5 years Desk 11 $3,180 $300 20 years

Explanation / Answer

Ans.1 Calculation for amount to be depreciated for each asset: Plant Assets Original Asset (a) Scrap value (b) Depreciated value (a)-(b)=( C) Cash Register $                450 $               30 $                   420 Computer $             6,500 $         1,500 $                5,000 Conference table $             1,900 $            100 $                1,800 Delivery Truck $          36,400 $         6,400 $             30,000 Desk $             3,180 $            300 $                2,880 Ans.2 Calculation of annual depreciation expense using Straight line method: Depreciation (SLM) : Original Cost - Scrap value/Estimated useful life Plant Assets Original Asset (a) Scrap value (b) Depreciated value (a)-(b)=( C) Useful Life (d) Depreciation Amt. Per year (c)/(d) Cash Register $                450 $               30 $                   420 7 years $                    60 Computer $             6,500 $         1,500 $                5,000 5 years $              1,000 Conference table $             1,900 $            100 $                1,800 25 years $                    72 Delivery Truck $          36,400 $         6,400 $             30,000 5years $              6,000 Desk $             3,180 $            300 $                2,880 20 years $                  144 Ans.3 Calculation of the depreciation expense for the first year: Plant Assets Depreciation Amt. Per year (a) Months owned first year (b) Depreciation Amt. for First year (a)x(b)/12 Cash Register $                   60 8 $                40.00 Computer $             1,000 2 $             166.67 Conference table $                   72 6 $                36.00 Delivery Truck $             6,000 3 $          1,500.00 Desk $                144 11 $             132.00

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