Question

A piece of equipment costs $2,500. If this asset depreciates on a 5-year schedule, the Net Fixed Asset value on the Balance sheet in year 2 will be more or less than this same asset depreciating on a 3-year schedule?

Answer 1

Answer:

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Explanation:

The computation of balance sheet after 2 will be more or less is shown below:-

After 2 years

Net fixed value after 2 years

For 5 years schedule

$2,500 - (($2,500 ÷ 5) × 2)

= $1,500

For 2 year schedule

$2,500 - (($2,500 ÷ 3) × 2)

= $833.33

After 2 year Net fixed assets will be higher for 5 year schedule at schedule of 2 year.