Question

On September 15, 2019, a computer was purchased with a 2-year useful life for $3,000, and a salvage value of $300.

Knowing that the depreciation expense for 2020 is $1,350, the amount of depreciation expense for 2019 and 2021 under the nearest fraction of a year policy, using the straight-line method is

Answer 1

The depreciation expense for year 2019 and 2021 (under the nearest fraction of a year policy) is calculated as below:

2019

For the year 2019, under the nearest fraction of the year policy, the relevant period would be September 15, 2019 to December 31, 2019. Therefore, for 2019, the depreciation expense would be calculated for 3.5 months as below:

Depreciation Expense (2019) = (Cost of Computer - Salvage Value)/Useful Life*3.5/12 = (3,000 - 300)/2*3.5/12 = $393.75

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2021

For the year 2021, under the nearest fraction of the year policy, the relevant period would be January 1, 2021 to September 15, 2021. Therefore, for 2021, the depreciation expense would be calculated for 8.5 months as below:

Depreciation Expense (2021) = (Cost of Computer - Salvage Value)/Useful Life*8.5/12 = (3,000 - 300)/2*8.5/12 = $956.25