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General Accounting Discussions: depreciation calculation

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    • CommentAuthorAdora
    • CommentTimeSep 8th 2009
     
    Can anyone help me figure this out. I have building and office equipment in the trial balance. The building costs $22,000 and the office equipment costs $6,800. The accumulated depreciation of the building is $6,000 and the accumulated depreciation of the office equipment is $2,100. In the additional data is states that building depreciation is calculated at 5% per year and office depreciation is calculated at 10% per year. Since there was no year given for each I figured you divided the accumulated depreciation by the percentage, I came up with $300.00 and $210.00 but those were wrong. I can't figure out what other way to do it without additional information to do any of the methods given in my text.
    Thankful People: sreenivaspatil
    • CommentAuthorzaqperez
    • CommentTimeSep 9th 2009
     
    I see two issues that need to be addressed. First, I think you took the percentage from the accumulated depreciation and not the base value. Second, I believe there should be a salvage value to consider in this problem. Based on those assumptions I come up with:

    Building

    If: $22,000 (original cost) - $2,000 (salvage value) = $20,000
    Then: 5% of $20,000 = $1,000 x 6 years = $6,000
    Therefore: I believe the building is 6 years old and has a useful life is 20 years and accumulates depreciation at a rate of $1,000 per year.

    Office Equipment

    If: $6,800 (origianl cost) - $1550 (salvage value) = $5,250
    Then: 10% of $5,250 = $525 x 4 years = $2,100
    Therefore: I believe the office equipment is 4 years old and has a useful life of 10 years and accumulates depreciation at a rate of $525 per year.

    Hope this helps!
    Thankful People: tgm603

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