00:01
Okay, so in this question we have been told that a piece of equipment was bought for $110 ,000.
00:08
Its salvage value of $10 ,000 and its useful life is of 10 years.
00:15
After five years, it was discovered that the salvage value will be 5 ,000 and remaining useful life is only two years.
00:22
What is the new depreciation using the sl method? now remember, depreciation under straight line method can be found by subtracting from the cost the salvage value and dividing that result by the estimated useful life.
00:40
So let's start by finding the accumulated depreciation after five years.
00:45
Because for the first five years, the first sentence of this question gives us information in order to find the depreciation during this time.
00:55
So for during the five years, the first five years rather, the cost is said to be 100%.
01:01
$10 ,000 minus the salvage value which is $10 ,000 and we divide this by the useful life, which is at that time known to be 10 years.
01:14
This will give us an answer of $10 ,000.
01:17
However, this is per year.
01:21
So accumulated depreciation for five years will be $10 ,000 into 5.
01:27
This will give give us an answer of 50 ,000...