Answer: The cost of the equipment is $154,000, and it has a salvage value of $25,000, so the amount to be depreciated is $154,000 - $25,000 = $129,000.
The equipment will be used for four years, and we are using straight-line depreciation, so the annual depreciation amount will be $129,000 / 4 = $32,250.
We can use this information to prepare a table showing the depreciation and book value for each of the four years. The table would look something like this:
Year Depreciation Book Value
1 $32,250 $121,750
2 $32,250 $89,500
3 $32,250 $57,250
4 $32,250 $25,000
In the first year, the equipment would be depreciated by $32,250, and its book value would be $121,750. In the second year, it would be depreciated by another $32,250, and its book value would be $89,500. This pattern would continue for the remaining two years, with the equipment being depreciated by $32,250 each year, and its book value decreasing accordingly. By the end of the fourth year, the equipment would have a book value of $25,000, which is its salvage value.
Step-by-step explanation: