Question

In early January 2017, NewTech purchases computer equipment for $156,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $21,000.

Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation. Straight-Line Depreciation Choose Numerator: Choose Denominator: Annual Depreciation Expense Depreciation expense Annual Depreciation Year-End Book Value Year 2017 2018 2019 2020 Total $

Answer 1

a) Straight line Depreciation

	Choose numerator	/	Choose denominator	=	Annual Depreciation expense
	(original cost-salvage value)	/	Useful life	=	Annual Depreciation expense
	(156000-21000)	/	4	=	33750
Year	Annual Depreciation		Year end book value
2017	33750		122250
2018	33750		88500
2019	33750		54750
2020	33750		21000

2) Double decline balance

Year	Beginning year book value	Depreciation rate	Annual Depreciation	Accumulated depreciation	Year end book value
2017	156000	50%	78000	78000	78000
2018	78000	50%	39000	117000	39000
2019	39000	50%	18000	132000	21000
2020	21000	50%	0	132000	21000
Total			135000