Question

The following information is available on a depreciable asset owned by Mutual Savings Bank:

Answer 1

Answer:

$4366.67

Explanation:

Given: Asset book value on july 1, year 3= $57800

          Salvage value= $5400

          Useful life left= 6 years.

Now, computing the depreciation expense under straight line method.

Formula; Depreciation= $\frac{Asset\ book\ value - salvage\ value}{useful\ life}$

Useful life in months= $6\times 12= 72\ months$

Next, Depreciation expense= $\frac{57800-5400}{72} = \ 727.77$

∴ Monthly depreciation expense= $ 727.77

Depreciation expense for last six months of year 3= $727.77 \times 6= \ 4366.67$

∴ Depreciation expense for last six month of year 3 is $4366.67.