Assume that a piece of equipment is purchased for $$ 100,000$. It costs $$ 5,000$ to install
Question:
Assume that a piece of equipment is purchased for $\$ 100,000$. It costs $\$ 5,000$ to install the equipment. We expect it to last for 5 years, and believe that we will be able to sell it for $\$ 25,000$ at the end of that five year period of time.
A. What is the depreciable base for the equipment?
B. Using straight-line depreciation, what is the annual depreciation?
C. After 3 years, how much accumulated depreciation will there be?
D. After 2 years, what is the net or book value of the equipment?
E. If we sell it after 3 years for $\$ 50,000$ will we have to record a gain or a loss? How much?
F. If we were using double declining balance instead of straight line depreciation, how much depreciation would there be in each year of the asset's five year life?
Step by Step Answer:
Finance And Accounting For Nonfinancial Managers
ISBN: 9780808046905
5th Edition
Authors: Steven A. Finkler