Return to ques In early January 2017, NewTech purchases computer equipment for $

Question

Return to ques In early January 2017, NewTech purchases computer equipment for $270,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $31,000 Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation. (Enter all amounts positive velues.) Answer is complete but not entirely correct. Depreciation for the Period End of Period Beginning- YearYear Book Annual Accumulsted Year-End Depreciation Book Value Rate s 270nd- 50%es 13500001 1350000 1350000 2018 2019 2020 Total 135.000 67 500 33.750 0%s135.000s 135,000s 135,000 50% -67,500° 202 5000: 67500 50% 50 33 750 236 250 33,750 875 253 125 16,875 $ 253.125

Explanation / Answer

$33,750 minus (50% of $33,750) equals $16,875, which is less than the salvage value of $31,000.
*So we restrict the depreciation upto Salvage value = $33,750 - $31,000 = $2,750

Depreciation for the period End of Period Year Beginning Year Book Value Depreciation Rate Annual Depreciation Accumulated
Depreciation Year-End Book Value 2017 $270,000 50% $135,000 $135,000 $135,000 2018 135,000 50% 67,500 202,500 67,500 2019 67,500 50% 33,750 236,250 33,750 2020 33,750 Force 2,750* 239,000 31,000 Total $239,000

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