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Straight-line Method of Depreciation
Total cost of acquisition = $100,000 100,000 ? 10,000 = 90,000
Salvage value = $10,000 90,000/4 = 22,500
Useful life = 4 years
Balances at Year-end 2005-2008
2005 2006 2007 2008
Cost of equipment 100,000 100,000 100,000 100,000
Accumulated depreciation 22,500 45,000 67,500 90,000
Net book value 77,500 55,000 32,500 10,000
As one can see the ending balance at year 4 equals the salvage value of $10,000...
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Straight-line Method of Depreciation
Total cost of acquisition = $100,000 100,000 ? 10,000 = 90,000
Salvage value = $10,000 90,000/4 = 22,500
Useful life = 4 years
Balances at Year-end 2005-2008
2005 2006 2007 2008
Cost of equipment 100,000 100,000 100,000 100,000
Accumulated depreciation 22,500 45,000 67,500 90,000
Net book value 77,500 55,000 32,500 10,000
As one can see the ending balance at year 4 equals the salvage value of $10,000...
Essay fragment
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