Answer:
A. The cost of asset being depreciated is $57,000
B.The amount of salvage value is $5,700
Explanation:
Among the above-mentioned methods of depreciation, the only method that never consider salvage value on its computation of depreciation expense is the double declining method. So let’s use this method to work back the exact amount depreciable amount of an asset.
Formula : 100% / life of an asset x 2
100% / 5 x 2 = 40%
Y1 = $22,800/40 = 57,000
so to check if the amount is correct, let’s do the computation of 5-year depreciation.
Y1 57,000 x 40% = 22,800 (same as the given data)
Y2 (57,000 - 22,800) x 40% =13,680
Y3 (57,000 - 22,800 - 13,680) x 40% = 8,208
Y4 (57,000-22,800 - 13,680 - 8,208) x 40% = 4,925
Y5 (57,000 -22,800 - 13,680 - 8,208 - 4,925) x 40% = 1,687* (adjusted based on the depreciable amount)
B. To compute the salvage value, we simply deduct the total depreciation from the cost of an asset.
57,000 - 51,300 = 5,700
To check:
(57,000 - 5,700) / 5 years = 10,260
