Assume a 5 year useful life with a residual value of 50000, Ask an Expert

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Smith Manufacturing purchased, for cash, three large pieces of equipment. Based on recent sales of similar equipment, the fair market values are as follows:

Piece 1 - $250,000
Piece 2 - $225,000
Piece 3 - $450,000

a. If all three pieces of the equipment were purchased for $850,000, what value should be assigned to each piece of equipment?

b. Assume a 5 year useful life with a residual value of $50,000, how much depreciation expense should the company record on its books each year using the straight line method of depreciation?

c. Assume a 5 year useful life with a residual value of $50,000, how much depreciation expense should the company record on its books each year using the double declining balance method of depreciation?

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Accounting Basics, Accounting

Category:- Accounting Basics
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