An asset has a cost of 65000 estimated residual value of 150

An asset has a cost of $65,000, estimated residual value of $15,000 and estimated useful life of 5 years. What is the amount of the depreciation expense for the first year, assuming the reducing-balance method is used and the annual rate is 30%?

Solution

Solution:

Cost = $65,000

Residual value = $15,000

Annual rate = 30%

Depreciation expense for first year = Book Vale *30% = 65000*30% = $19,500