Question

# Tucker Ltd purchases an equipment for \$300,000 on 1 July 2015 and depreciates the asset over...

Tucker Ltd purchases an equipment for \$300,000 on 1 July 2015 and depreciates the asset over 15 years. The estimated residual value is \$30,000. On 30 June 2018, the management of Tucker Ltd assesses the equipment as having a recoverable amount of \$200,000. What should be the depreciation expense recorded by Tucker Ltd on 30 June 2019 assuming the original estimated useful life and residual value remain the same?

a) \$14,167

b) \$16,667

c) \$13,333

d) \$11,333

 Year Opening Value Depreciation Closing value 30th June 2016 300000 18000 282000 30th June 2017 282000 18000 264000
 Depreciation Calculation (2016&2017) Depreciation = Purchase price - Residual Value/Number of years of usseful life Depreciation = (300000-30000)/15 = 18000
 Depreciation expense on 30th June 2018 Opening Book Value 264000 Recoverabe Amount 200000 Depreciation expense on 30th June 2018 64000
 Depreciation expense on 30th June 2019 Opening Value 200000 Remaining useful life 12 years Residual Value 30000 Depreciation expense on 30th June 2019 (200000-30000)/12 = 14,167

Option A is the Correct Answer.