Final answer:
To calculate DLW's year 3 cost recovery for each asset if DLW sells these assets on 5/20 of year 3, we need to know the initial cost of each asset and the depreciation method used by DLW. The cost recovery is calculated by subtracting the accumulated depreciation from the initial cost of the asset.
Step-by-step explanation:
The question is asking about DLW's year 3 cost recovery for each asset if DLW sells these assets on 5/20 of year 3. To calculate the cost recovery for each asset, we need to know the initial cost of each asset and the depreciation method used by DLW. The cost recovery is calculated by subtracting the accumulated depreciation from the initial cost of the asset.
For example, if DLW purchased an asset for $10,000 and depreciates it using the straight-line method over a 5-year period, the annual depreciation expense would be $2,000 ($10,000 / 5). If DLW sells the asset on 5/20 of year 3, it means the asset has been in use for 3 years.
To calculate the accumulated depreciation, we multiply the annual depreciation expense by the number of years the asset has been in use. In this case, the accumulated depreciation would be $6,000 ($2,000 x 3). The cost recovery for this asset would be the initial cost minus the accumulated depreciation, which is $4,000 ($10,000 - $6,000).