Use the sliders provided above for (1) expected useful life, and (2) estimated residual value to answer the following questions:

1.            Assume that the equipment has an expected useful life of 10 years and an estimated residual value of $40,000.

a.            Determine depreciation expense for the year ended December 31, 20x1.

b.            Determine depreciation expense for the year ended December 31, 20x2.

c.             In 20x2, depreciation expense will be - Select your answer -larger than smaller than the same as Correct 3 of Item 6 the depreciation expense in 20x1.

d.            Determine the book value of the equipment that should be reported on the December 31, 20x1 balance sheet.

e.            As the equipment is depreciated each year, the book value of the equipment that is reported on the balance sheet will - Select your answer -increase decrease remain the same Correct 5 of Item 6.

2.            Assume that the equipment has an expected useful life of 5 years and an estimated residual value of $70,000.

a.            Determine depreciation expense for the year ended December 31, 20x1.

b.            Determine depreciation expense for the year ended December 31, 20x2.

c.             If the estimated residual value remains the same, an increase in the estimated useful life of the equipment will result in - Select your answer –higher lower the same Correct 8 of Item 6 depreciation expense.

d.            Determine the book value of the equipment that should be reported on the December 31, 20x2 balance sheet.

e.            If the estimated useful life remains the same, an increase in the estimated residual value of the equipment will result in - Select your answer –higher lower the same Correct 10 of Item 6 depreciation expense in years 20x1 and 20x2.

Answer rating: 100% (QA)

solution 1a Depreciation expense for the year ended December 31 20x1 Purchase Price Estimated Residu... View the full answer