Alley Limited purchased certain manufacturing equipment for $810,000 on1stJuly 2006. The equipments expected to have a useful life of four years and salvage value of$10,000. The manager of Alley Limited wishes to know the effect that various depreciation methods will have on the reported profit of the company and asks you to prepare a schedule comparing the straight-line and the reducing balance methods of depreciation (use0.6667 for reducing balance). The financial year ends on the 30th June.

Required: 

1 Calculate the annual depreciation expense and end-of-year carrying amount of the equipment for each year of its estimated useful life. Show your workings.

Answer rating: 100% (QA)

Given Cost of equipment810000 Period 5 years Salvage cost10000 Straightline method Annual depreciation expense Cost of an asset Salvage cost ... View the full answer