** REQUIRED: 1) Determine the following: a) amount of depreciation expense FYE 1
ID: 2547882 • Letter: #
Question
** REQUIRED:
1) Determine the following:
a) amount of depreciation expense FYE 12/31/10. 30000
b) book value of the tools at 12/31/15. 360000
c) amount of depreciation expense FYE 12/31/16. 28000
d) balance of accumulated depreciation at 12/31/17. 236000
e) book value of the tools at 12/31/18. 276000
Here are the correct answers, can you please explain how they were computed. Thank you.
Cus Co acquired some tools on 1/1/10 costing $540,000. Depreciable value was set at $480,000 with an expected useful life of 16 years. The straight-line method is used to calculate depreciation. During 2016, the estimated salvage value was decreased by $8,000 and the expected useful life was determined to be 17 years from date of acquisition.** REQUIRED:
1) Determine the following:
a) amount of depreciation expense FYE 12/31/10. 30000
b) book value of the tools at 12/31/15. 360000
c) amount of depreciation expense FYE 12/31/16. 28000
d) balance of accumulated depreciation at 12/31/17. 236000
e) book value of the tools at 12/31/18. 276000
Here are the correct answers, can you please explain how they were computed. Thank you.
Explanation / Answer
Depreciation Table
Year Ended
Opening Value
Depreciation
Accumulated Depreciation
Closing Value
31-12-2010
$ 540000
$ 30,000
$ 30000
$ 510000
31-12-2011
$ 510000
$ 30,000
$ 60000
$ 480000
31-12-2012
$ 480000
$ 30,000
$ 90000
$ 450000
31-12-2013
$ 450000
$ 30,000
$ 120000
$ 420000
31-12-2014
$ 420000
$ 30,000
$ 150000
$ 390000
31-12-2015
$ 390000
$ 30,000
$ 180000
$ 360000
31-12-2016
$ 360000
$ 28000
$ 208000
$ 332000
31-12-2017
$ 332000
$ 28000
$ 236000
$ 304000
31-12-2018
$ 304000
$ 28000
$ 264000
$ 276000
Depreciation upto 31-12-2015 = Depreciable Value / Usefull Life
= $ 480000 / 16 years
= $ 30,000 / Year
Revised Salvage Value = ( $ 540000 - $ 480000 ) - $ 8000 = $ 52000
Remaining usefull life from 2016 = 17 Years – 6 Years already completed
= 11 Years
Therefore,
Depreciation from 2016 $ 540000 - $ 180000 -$ 52000 ) / 11 Years
= $ 308000 / 7 Years
= $ 28,000 Years
Year Ended
Opening Value
Depreciation
Accumulated Depreciation
Closing Value
31-12-2010
$ 540000
$ 30,000
$ 30000
$ 510000
31-12-2011
$ 510000
$ 30,000
$ 60000
$ 480000
31-12-2012
$ 480000
$ 30,000
$ 90000
$ 450000
31-12-2013
$ 450000
$ 30,000
$ 120000
$ 420000
31-12-2014
$ 420000
$ 30,000
$ 150000
$ 390000
31-12-2015
$ 390000
$ 30,000
$ 180000
$ 360000
31-12-2016
$ 360000
$ 28000
$ 208000
$ 332000
31-12-2017
$ 332000
$ 28000
$ 236000
$ 304000
31-12-2018
$ 304000
$ 28000
$ 264000
$ 276000
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