Question

Equipment acquired at the beginning of the year at a cost of $340,000 has an estimated residual value of $45,000 and an estimated useful life of 10 years. Determine the following. Round your answer for the straight-line rate to one decimal place, if necessary.

(a) The depreciable cost $fill in the blank 1
295,000

(b) The straight-line rate fill in the blank 2
9
%
(c) The annual straight-line depreciation

Answer 1

The depreciable cost of the equipment is $295,000, the straight-line rate of depreciation is 10% per year, and the annual straight-line depreciation amount is $29,500.

Step-by-step explanation:

For equipment with a cost of $340,000, an estimated residual value of $45,000, and an estimated useful life of 10 years, the calculations for depreciation using the straight-line method would be as follows:

The depreciable cost is calculated by subtracting the residual value from the cost of the equipment. Depreciable cost = Cost - Residual value. Therefore, depreciable cost = $340,000 - $45,000

= $295,000.

To find the straight-line rate, we divide 1 by the number of years in the useful life of the asset and then multiply by 100 to express as a percentage. Straight-line rate = (1 / Useful life) * 100.

Therefore, straight-line rate = (1 / 10 years) * 100

= 10% per year.

The annual straight-line depreciation is computed by dividing the depreciable cost by the useful life of the asset. Annual depreciation = Depreciable cost / Useful life. Thus, the annual depreciation = $295,000 / 10 years

= $29,500 per year.