Question

Computer equipment was acquired at the beginning of the year at a cost of $65,500 that has an estimated residual value of $4,900 and an estimated useful life of five years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

Answer 1

1. $60,600

2. 20%

3. $12,120

Step-by-step explanation:

Given the data;

Cost = $65,500

Residual value = $4,900

Useful life = 5 years

Then,

1. Depreciable cost = Cost - residual value

= $65,500 - $4,900

= $60,600

2. Straight-line rate = 100 / Useful life

= 100 / 5

= 20%

3. Annual straight line depreciation = Cost - Residual value / Useful life

= ($65,600 - $4,900) / 5

= $60,600 / 5

= $12,120