Answer:
Results are below.
Explanation:
Giving the following information:
Purchase price= $56,000
Useful life= 6 yearsd
Salvage value= $5,000
<u>a. To calculate the annual depreciation, we need to use the following formula:</u>
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (56,000 - 5,000) / 6= $8,500
<u>Year 1</u>:
Annual depreciation= (8,500/12)*10= $7,083.33
<u>Year 2:</u>
Annual depreciation= $8,500
<u>b. To calculate the annual depreciation, we need to use the following formula:</u>
Annual depreciation= 1.5*[(book value)/estimated life (years)]
<u>Year 1:</u>
Annual depreciation= [(1.5*8,500)/12]*10= $10,625
<u>Year 2:</u>
Annual depreciation= [(51,000 - 10,625)/6]*1.5
Annual depreciation= $10,093.75
