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10 February, 19:13

Computer equipment was acquired at the beginning of the year at a cost of $51,000. It had an estimated residual value of $5,000 and an estimated useful life of five years. Determine the

(a) depreciable cost,

(b) straight-line rate, and

(c) annual straight-line depreciation.

a. Depreciable cost $

b. Straight-line rate %

c. Annual straight-line depreciation

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Answers (1)
  1. 10 February, 19:21
    0
    a) $46,000

    b) 0.20 or 20%

    c) $9,200

    Explanation:

    Data provided in the question:

    Cost = $51,000

    Residual value = $5,000

    Useful life = 5 years

    Now,

    (a) Depreciable cost = [ Cost - Salvage value ]

    = $51,000 - $5,000

    = $46,000

    (b) Straight-line rate = 1 : [ Useful life ]

    = 1 : 5

    = 0.20 or 20%

    (c) Annual straight-line depreciation = Depreciable cost * Straight-line rate

    = $46,000 * 0.20

    = $9,200
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