Siness Fitness Club uses straight-line depreciation for a machine costing $26,40

Question

Siness Fitness Club uses straight-line depreciation for a machine costing $26,400, with an estimated four year life and a $2,900 salvage value. At the beginning of the third year, Siness determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,050 salvage value. Compute (1) the machine's book value at the end of its second year and (2) the amount of depreciation for each of the final three years given the revised estimates.


*Please explain how you get your answer and make sure that it is 100% correct.

Thank you,

Explanation / Answer

26,400 - 2,900 = 23,500 depreciation basis. 23,500 / 4 = 5,875 depreciation per year. Two years of accumulated depreciation is 11,750 and the book value at the end of the second year is 14,650 (26,400 - 11,750). 14,650 - 2,050 = 12,600 New depreciation basis 12,600 / 3 = 4,200 New depreciation expense per year.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---