Simpson Inc just purchased a piece of equipment to be used i

Simpson Inc. just purchased a piece of equipment to be used in its factory operations. The cost of this machinery is $150,000, and the asset is expected to have a useful life of 3 years. The company anticipates a salvage value of $30,000 at the end of the asset\'s life.

Calculate the Depreciation Expense, accumulated depreciation and book value of the asset for each of the 5 years of the asset\'s life. Use the Straight-Line method for your calculations.

Solution

Calculate depreciation expense under straight line method :

Straight line dep = 150000-30000/3 = 40000 per year