Answer:
Scrimshander, Inc.
a) Annual depreciation expense = $360,000
b) Net book value of the cargo ship as of December 31, 2019 = $9,280,000
c) Net book value of the cargo ship as of December 31, 2041 = $1,360,000
d) Depreciation expense for 2042 = $360,000
Explanation:
a) Data and Calculations:
Purchase price of a cargo ship = $10,000,000
Expected useful life of the ship = 25 years
Salvage value = $1,000,000
Depreciable amount = $9,000,000 ($10,000,000 - $1,000,000)
Annual depreciation expense = $360,000 ($9,000,000/25)
Net book value as of December 31, 2019 = $9,280,000 ($10,000,000 - $720,000)
Accumulated depreciation = $720,000 ($360,000 * 2)
Net book value as of December 31, 2041 = $1,360,000 ($10,000,000 - 8,640,000)
Accumulated depreciation = $8,640,000 ($360,000 * 24)
