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General Accounting Discussions: Depreciation Problem

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    • CommentAuthorpalal9923
    • CommentTimeAug 15th 2007
     
    ABC Company has paid 450,000 to purchase equipment at the beginning of 2003. ABC company estimated the useful life of the equipment to be 4 years (200,000 units). The equipment will be considered fully depreciated when the balance in the accumulated depreciation amount reaches 420,000. The equipment produced 55,000 units in 2004.

    A) What is the depreciable cost of the equipment?

    B) Determine the estimated residual value of the equipment?
    • CommentAuthorwhitewall
    • CommentTimeAug 31st 2007
     
    The equipment will be considered fully depreciated when the balance in the accumulated depreciation amount reaches 420,000 ==> So the depreciable cost of the equipment is $420,000. And residual value = 450,000-420,000=30,000

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