Computer equipment was acquired at the beginning of the year at a cost of $51,000. It had an estimated residual value of $5,000 and an estimated useful life of five years. Determine the

(a) depreciable cost,

(b) straight-line rate, and

(c) annual straight-line depreciation.

a. Depreciable cost $

b. Straight-line rate %

c. Annual straight-line depreciation

a) $46,000

b) 0.20 or 20%

c) $9,200

Explanation:

Data provided in the question:

Cost = $51,000

Residual value = $5,000

Useful life = 5 years

Now,

(a) Depreciable cost = [ Cost - Salvage value ]

= $51,000 - $5,000

= $46,000

(b) Straight-line rate = 1 : [ Useful life ]

= 1 : 5

= 0.20 or 20%

(c) Annual straight-line depreciation = Depreciable cost * Straight-line rate

= $46,000 * 0.20

= $9,200