Calculating Depreciation Expense for Equipment in 2024
Explanation:
Depreciation Expense Calculation:
The equipment was purchased on 01/01/22 for $200 with a salvage value of $20,000 and a useful life of 10 years, using straight-line depreciation method.
The annual depreciation expense can be calculated using the formula:
Depreciation Expense = (Initial Cost - Salvage Value) / Useful Life
Given data:
Initial Cost = $200
Salvage Value = $20,000
Useful Life = 10 years
Calculate the annual depreciation expense:
Depreciation Expense = ($200 - $20,000) / 10 = $2,000
If the useful life is changed to 6 years and salvage value to $0 in 2024, then the new annual depreciation expense for 2024 would be:
Depreciation Expense = ($200 - $0) / 6 = $33.33
Therefore, the depreciation expense for 2024 would be $33.33.