On January 1, 2004, Forbes Company purchased equipment at a cost of $50,000.The equipment was estimated to have a residual value of $5,000 and it is being depreciated over eight years under the sum-of-the-years'-digits method.What should be the charge for depreciation of this equipment for the year ended December 31, 2011?

Question

Quizplus · Accepted Answer

The equipment is fully depreciated by the end of 2011, as it was purchased in 2004 and has an 8-year life. Therefore, the depreciation charge for 2011 is $0. However, if considering the last year of depreciation, the charge would be the remaining book value, which is $1,250.

On January 1, 2004, Forbes Company Purchased Equipment at a Cost