Straight-line depreciation is that the simplest and most frequently used methodology. during this method, the corporate estimates the salvage value(scrap value) of the asset at the end of the amount throughout that it'll be used to generate revenues (useful life). (The salvage value is associate estimate of the value of the asset at the time it'll be oversubscribed or disposed of; it should be zero or maybe negative. Salvage worth is additionally called scrap worth or residual value.) the corporate can then charge constant quantity to depreciation annually over that amount, till the value shown for the asset has reduced from the first value to the salvage value.
On April 1, 2011, Company A purchased Associate in Nursing an at the value of $140,000. This equipment is calculable to possess five year useful life. At the top of the fifth year, the salvage value (residual value) are $20,000. Company A recognizes depreciation to the nearest whole month. Calculate the depreciation expenses for 2011, 2012 and 2013 using straight line depreciation method.
Depreciation for 2011
= ($140,000 - $20,000) x 1/5 x 9/12 = $18,000
Depreciation for 2012
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
Depreciation for 2013
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
= ($140,000 - $20,000) x 1/5 x 9/12 = $18,000
Depreciation for 2012
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
Depreciation for 2013
= ($140,000 - $20,000) x 1/5 x 12/12 = $24,000
| Depreciation expense |
Accumulated depreciation at year-end |
Book value at year-end |
|---|---|---|
| (original cost) $140,000 | ||
| $18,000 | $18,000 | $122,000 |
| 24,000 | 42,000 | 98,000 |
| 24,000 | 66,000 | 74,000 |
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