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Homework answers / question archive / Operational Assets: Utilization and Impairment 1)-On January 1, we purchase equipment for $70,000 cash
Operational Assets: Utilization and Impairment 1)-On January 1, we purchase equipment for $70,000 cash. The equipment has an estimated service life of 5 years and estimated residual value of $10,000 1- What is the annual straight-line depreciation expenses? 2-Using SYD, compute depreciation for the first two years. 3-What is depreciation for the first two years using double-declining- balance? 11)-On January 1, we purchased equipment for $70,000 cash. The equipment is expected to produce 100,000 units during its life and has an estimated residual value of $5,000. If 35,000 units were produced this year, what is the amount of depreciation?
1) Depreciation under straight line =Total cost - Residual value /Number of years
=70000-10000/5
=12000 per annum
2)Depreciation = (Cost -salvage ) /sum of useful life * Remaining useful life
=(70000-10000)/15*4
=16000
3)Depreciation = Book value /useful life *2
For First year =70000/5 * 2 =28000
Balance Book value = 70000-28000 =42000
Depreciation for Second year =42000/5*2 = 16800
Hence ,the amount is 16800
II) Depreciation = Cost -Residual value / Total Units * Units Produced
= 70000-5000 / 100000 *35000 =22750
Hence the depreciation is 22750
