Which answer is correct? Accumulated Depreciation Current year 1178 Accumulated

Question

Which answer is correct? Accumulated Depreciation Current year 1178 Accumulated Depreciation Last year -1023 Depreciation expense for the year 155 Age of the Property Plant and Equipment at the end of current year = Accumulated Depreciation Current year/ Depreciation expense for the year =1178/155= 7.6 years OR Annual depreciation = $1,178 - $1,023 = $155 Per year. Book value of asset at end of year = $2,733 Annual depreciation = $155 We assume straight line depreciation. Life of asset = $2,733 / $155 = 17.63 year approx.

Explanation / Answer

Given,

Accumulated Depreciation Current year = 1178

Accumulated Depreciation Last year = 1023

Depreciation expense for the year = 155

Since Straight Line Depreciation is assumed, therefore annual depreciation will remain same.

Thus Annual Depreciation = 155

Age of the  Property Plant and Equipment at the end of current year

= (Book Value Of asset at he end of the year) / Annual Depreciation

= 2,733 / 155

= 17.63 years approx.

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