On March 10, 2016, Lost World Company sells equipment that it purchased for $408

Question

On March 10, 2016, Lost World Company sells equipment that it purchased for $408,960 on August 20, 2009. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $35,784 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation. Compute the depreciation charge on this equipment for 2009, for 2016, and the total charge for the period from 2010 to 2015, inclusive, under each of the six following assumptions with respect to partial periods.

Explanation / Answer

Workings 2009 2010-2015 2016 1 $408900 – $35784 = $444744 $373176 ÷ 12 = $31098 per yr. ($85.20 per day) 133*/365 of $31098 = $11332 2003–2008 Include. (6 X $31098) 186588 68/365 of $31098 = 11332 186588 5794 2 31098*12, 0 186588 31098 3 31098 186588 0 4 31098/2 15549 186588 15549 5 4/12*31098=10366,3/12*31098 10366 186588 7775 6 0 186588 0

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