Question

Global Manufacturing Company purchased new equipment on April 29,2020 at a cost of $80000. Useful life of this equipment was estimated at 4years,with an estimated residual value of $5000.For income tax purpose,this equipment is classified as“5-years property”. Instructions:Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each of depreciation method listed below. i) Straight-line,with depreciation for fractional years rounded to the nearest whole month. ii) 200%-declining-balance,with the half-year convention.​

Answer 1

Depreciation means the decrease in the value of Fixed assets by passing time. It is charged only on fixed assets (except Land) Because every fixed asset has a life of more than one year but will not last indefinitely and The land has an indefinitely life so it will be appreciated.