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Cengage LT X v2 cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator-assignment-take; CHAPTER 10-LONG-TERM ASSETS: FIXED AND INTANGIBLE Study Progress Done Activity Take: Practice! Revision of Depreciation Question 1 Revision of Depreciation Equipment with a cost of $555, 500 has an estimated residual value of $59,500, has an estimated useful life of 32 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. b. Determine the book value after 19 full years of use. c. Assuming that at the start of the year 20 the remaining life is estimated to be 19 years and the residual value is estimated to be $55,800 determine the depreciation expense for each of the remaining 19 years. Submit Answer Try Another Version Save and Exit Submit Assignment for Grading Learni Type here to search 1013 PM 2/1/2018 23

Solution

Given data,

Cost = $555500

Residual Value = $59500

Useful life = 32 years

Requirement a:

Amount of Annual Depreciation

= (Cost – Residual Value) / Useful life

= (555500-59500) / 32

= 496000 /32

= 15500

Amount of Annual Depreciation = $15500

Requirement b:

Depreciation for 19 full years of use

= $15500 *19

= $294500

Book value after 19 full years of use

= Cost – Accumulated Depreciation

=$555500 - $294500

= $261000

Book Value after 19 full years of use = $261000

Requirement c:

Book Value = $261000

Remaining Useful life = 19 years

Estimated Residual Value = $55800

Depreciation for the remaining 19 years

= (Book Value – Revised Residual Value) / Remaining Useful life

= (261000 – 55800) / 19

= $10800

Depreciation Expense for each of the remaining 19 years = $10800