At the beginning of Year 1, Herkimer & Co. purchases a set of seven laptops for its new employees. Each laptop costs $2,300 and has a residual value of $500. The company expects to use the laptops for three years.<\/p>\n\n\n\n
Calculate the annual depreciation rate for the group of laptops.<\/p>\n\n\n\n
The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n To calculate the annual depreciation rate for the group of laptops, we will use the straight-line depreciation method<\/strong>, which is one of the simplest and most commonly used depreciation methods.<\/p>\n\n\n\n The depreciable cost is determined by subtracting the residual value from the initial cost:<\/p>\n\n\n\n [ [ Using the straight-line method, the annual depreciation expense is calculated by dividing the depreciable cost by the useful life:<\/p>\n\n\n\n [ [ The depreciation rate is determined as a percentage of the depreciable cost over the useful life:<\/p>\n\n\n\n [ [ [ The depreciation rate of 26.09% per year<\/strong> means that each laptop loses approximately 26.09% of its original cost in value every year over the three-year period. Since there are seven laptops<\/strong>, the total annual depreciation expense for all laptops would be:<\/p>\n\n\n\n [ This method ensures an equal allocation of the depreciation expense over time, allowing Herkimer & Co. to systematically account for the asset’s declining value in financial records. This approach simplifies tax reporting and financial planning, as businesses can predict depreciation expenses consistently.<\/p>\n","protected":false},"excerpt":{"rendered":" At the beginning of Year 1, Herkimer & Co. purchases a set of seven laptops for its new employees. Each laptop costs $2,300 and has a residual value of $500. The company expects to use the laptops for three years. Calculate the annual depreciation rate for the group of laptops. The correct answer and explanation […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-203268","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/203268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=203268"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/203268\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=203268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=203268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=203268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Step 1: Calculate the Depreciable Cost per Laptop<\/h3>\n\n\n\n
\\text{Depreciable Cost} = \\text{Initial Cost} – \\text{Residual Value}
]<\/p>\n\n\n\n
= 2,300 – 500 = 1,800
]<\/p>\n\n\n\nStep 2: Calculate Annual Depreciation Expense per Laptop<\/h3>\n\n\n\n
\\text{Annual Depreciation Expense} = \\frac{\\text{Depreciable Cost}}{\\text{Useful Life}}
]<\/p>\n\n\n\n
= \\frac{1,800}{3} = 600
]<\/p>\n\n\n\nStep 3: Calculate the Depreciation Rate<\/h3>\n\n\n\n
\\text{Depreciation Rate} = \\left(\\frac{\\text{Annual Depreciation Expense}}{\\text{Initial Cost}}\\right) \\times 100
]<\/p>\n\n\n\n
= \\left(\\frac{600}{2,300}\\right) \\times 100
]<\/p>\n\n\n\n
= 26.09\\%
]<\/p>\n\n\n\nExplanation:<\/h3>\n\n\n\n
7 \\times 600 = 4,200
]<\/p>\n\n\n\n