Haaland Company depreciates an asset with an original cost of $8,000 over 5 years using the...

Haaland Company depreciates an asset with an original cost of $8,000 over 5 years using the sum-of-the-years digits’ method of depreciation. The asset was purchased on July 1, 2020 and the depreciation expense for 2020 is $1,250. What is the estimated salvage value of the asset?

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Expert Solution

Working Notes:
	CALCULATION OF THE NET VALUE ON WHICH DEPRECIATION IS CHARGED


	SUM OF DIGITS = 1+2+3+4+5 = 15

	In First year of Depreciation Digit is 5 used and for 6 month of use only

	Net value of the assets as per half year depreciation = $ 1,250 X 15 / 5=	$ 3,750

	So Full value of assets = $ 3,750 X 2 =	$ 7,500


Solution:
	Calculation of Salvage value of the Assets

	Purchase value of the assets =	$ 8,000
	Less: Depreciabble value of the assets	$ 7,500
	Net Difference is salvage value	500.00


	Answer = Salvage value of the assets = $ 500

ekkarill92 answered 1 year ago

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