Answer: $2400
Explanation:
The straight line depreciation calculates the depreciation expense as cost of asset less salvage value, the value derived is then divided by useful life
Depreciation expense = (Cost of asset - Salvage value) / useful life
Cost of asset-$12,000
Useful life- 5 years
Initial salvage value - $2000
Salvage value after 3 years - $1200
Depreciation expense for the first 3 years -
$12000 - $2,000 = $10,000
Accumulated depreciation = (3/5)×10,000=$6,000
Net book value at the beginning of the 5th year = $6,000-$1200 = $4800
Depreciation expense for the 4th and 5th years = $4800 ÷ 2 = $2400
Answer:
The amount of depreciation to be charged against the equipment during each of the remaining years of its useful life=$2,400
Explanation:
The initial depreciable cost is expressed as;
initial depreciable cost=acquisition cost-initial salvage value
where;
acquisition cost=$12,000
initial salvage value=$2,000
replacing;
initial depreciable cost=12,000-2000=$10,000
initial annual depreciable expense=initial depreciable cost/useful life=10,000/5=$2,000
Accumulated depreciation for the three years=annual depreciation×utilized useful life=2,000×3=$6,000
Determine the new depreciable cost=net book value at end of year 3-new salvage value
where;
net book value at end of year 3 =acquisition cost-accumulated depreciation at end of year 3
net book value at end of year 3=(12,000-6,000)=$6,000
new salvage value=$1,200
replacing;
new depreciable cost=net book value at end of year 3-new salvage value
new depreciable cost=6,000-1,200=$4,800
new annual depreciation expense=4,800/2=$2,400
The amount of depreciation to be charged against the equipment during each of the remaining years of its useful life=$2,400
