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?

Answer rating: 100% (QA)

A The depreciable base for the equipment is the total cost of the equipment including installation minus the expected salvage value at the end of its ... View the full answer