The MNO Company bought a new computer system for $31,000 on January 1, 2013. The

Question

The MNO Company bought a new computer system for $31,000 on January 1, 2013.
The system will have a 4 year life with a $3,000 salvage value. Calculate the depreciation expense
the accumulated depreciation, and the book value for each of the five years of the computer's life
assuming:
a) the company uses straight-line depreciation
b) the company uses units-of-production depreciation
It is estimated that computer will be used 14,600 hours over the next 4 years.
Actual usage: 2013 - 4,000 hours; 2014 - 4,200 hours; 2015 - 3,900 hours; 2016 - 4,100 hours
c) the company uses double-declining balance depreciation
d) the company uses sum-of-the-years'-digits depreciation
e) Is it better to use an accelerated method for depreciation?

Explanation / Answer

Cost: $31,000- Salvage Value: $3000 = Deprecitable Cost: $28,000

Deprecitable Cost /Useful Life: 4 = Annual Depreciation Expense:= $7000

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