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2. Depreciation and related terminologies definite useful life We depreciate an equipment over its legal/useful/contractatural life Example of long-lived asset we do not depreciate/amortize: 10
2. Depreciation and related terminologies definite useful life We depreciate an equipment over its legal/useful/contractatural life Example of long-lived asset we do not depreciate/amortize: 10 Depreciation expense: cost allocated to current period (s Accumulated depreciation: accumulation of cost allocation over several periods B Equipment purchased on July 1 cost the company $50,000. They anticipate it will be sold for scrap for $3,000 at the end of its useful life of 5 yrs. They estimate they will be able to use it 100,000 hours. Hours of use were as follows: Year 1: 15,000; Year 2: 21,000; Year 3: 40,000; Year 4: 2,000; Year 5: 22,000. residuel velve (cost-residuel valve) x eige =dep expense Using Straight Line, complete the following table: Year Dep. Cost Rate 1/5 1/5 1 2 1 2 47000 4700 0 Portion of yr 6/12 6/12 Depr Exp 4700 Using the declining balance method (double declining balance) complete the following table: Portion of yr Depr Exp Dbl SL Rate Book Value Year A/D Accu Dep 4700 internally generoua integible asset Cost-Ap Book Value 45, 300 Book Value
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