Online professor's response to: Depreciation
Equipment purchased at the beginning of the fiscal year for $150,000 is expected to have a usful life of 5 years, or 15,000 operating hours, and a residual value f $30,000. Computing the depreciation for the first and second years of use by each of the following methods:
(a) straight-line
(b) units-of-production (2,500 hours first year; 3,250 hours second year)
(c) declining-balance at twice the straight-line rate
(Round to the nearest Dollar)
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Hello
Please see the solution and explanations below and as an attachment
(a) straight-line
Under this method we first calculate the total depreciation amount in useful life.
Total depreciable value of asset = Purchase amount - residual value (salvage value) at the end of useful life
= 150000-30000
= ...
Solution Summary
Solution contains computation of depreciation for first and second year of use by using different methods.