Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method. a. $9,600 b. $19,200 c. $9,000 d. $13,200

a. $9,600

Explanation:

Given Data

Cost of the computer $ 57000

Residual Value $ 9000

Estimated useful life 5 years

Straight Line depreciation expense remains constant for each year. Depreciation is expensed out equally each year.

Formula

Straight line depreciation Expense = Cost - Residual Value / No of years

= $57000 - 9000/5 = 48000/5 = $ 9600

Each year the depreciation expense will be $ 9600.

When we add depeciation for two years it is called accumulated depreciation.

Accumulated Depreciation for 2 years is = 9600 + 9600 = 19200 but depreciation is only $ 9600

Computer Equipment

a. $9,600.

Second-year Depreciation using the straight-line method is $9,600. It is the same for each of the five years.

Explanation:

1. Cost of Computer Equipment = $57,000

Less Residual Value = $9,000

Depreciable Amount = $48,000 ($57,000 - 9,000)

Useful life = 5 years

Depreciation per year, using straight-line method = $48,000/5 = $9,600.

2. The straight-line method of depreciation charges the same amount per year for depreciation.

3. Note that depreciation is an accounting technique which allocates the cost of a capital asset over its useful life. It is a means of spreading the cost over the periods for which the resource generates income.