At the beginning of the fiscal year, Borland company acquired new equipment a co

Question

At the beginning of the fiscal year, Borland company acquired new equipment a cost of $65,000.The equipment has an estimated life of years and an estimated salvage value $5,000 Using the Straight line method, determine the annual depreciation for each of the five years of estimated useful life of the equipment, the- accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year. Using the Declining balance method, determine the annual depreciation for each of five years of estimated useful life of the equipment, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year.

Explanation / Answer

a) Annual Depreciation = (Cost of equipment -salvage value)/ life time
annual depreciation = (65,000-5000)/5 = $12,000
End of year 1
Accumulated depreciation = $12,000 Book Value = $53,000
End of year 2
Accumulated depreciation = $24,000 Book Value = $41,000
End of year 3
Accumulated depreciation = $36,000 Book Value = $29,000
End of year 4
Accumulated depreciation = $48,000 Book Value = $17,000
End of year 5
Accumulated depreciation = $60,000 Book Value = $5,000

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