Chapter 3
Long-Term Assets
97
AP-6A (
3
)
On January 1, 2013 a long-term asset was purchased for $50,000. The asset was expected to
last for four years (with an estimated residual value of $10,000). For the first two years, the
company used the double-declining-balance. Suppose the company decides to switch to
the straight–line method after recording the depreciation expense for 2014. Calculate the
depreciation expense for the years 2015 and 2016.
AP-7A (
3
4
)
On December 31, 2010, Tiesto Company purchased equipment worth $150,000. The
equipment has a useful life of six years and no residual value. Depreciation is recorded
beginning a month after acquisition and will be recorded up until the month of disposal. The
company uses the straight-line method of depreciation.
Required
a) Given that the company’s year-end is December 31, complete the following table.
Year
Cost of Long-Term
Asset
Depreciation
Expense
Accumulated
Depreciation
To Date
Net Book
Value
