On January 2, 2008, the CerritosBand acquires sound equipment for concert perfor
ID: 2457550 • Letter: O
Question
On January 2, 2008, the CerritosBand acquires sound equipment for concert performances at a cost of$65,800. The band estimates it will use this equipment for fouryears, during which time it anticipates performing about 200concerts. It estimates that after four years it can sell theequipment for $2,000. During year 2008, the band performs 45concerts. Assume that Cerritos Band chose straight-linedepreciation but realizes early in the second year that due toconcert bookings beyond expectations, this equipment will last onlya total of three years. The salvage value remains unchanged.Compute the revised depreciation for the second year. (Omitthe "$" sign in your response.)
Book value at point of revision
$
(0%)
Remaining depreciable cost
$
(0%)
Depreciation per year for year 2
$
(0%)
Cost
$
65,800
Less Accumulated depreciation (first year)
15,950
Book value at point of revision
49,850
Less Salvage value
2,000
Remaining depreciable cost
47,850
Years of life remaining
÷2
Depreciation per year for year 2
$
23,925
Book value at point of revision
$
(0%)
Remaining depreciable cost
$
(0%)
Depreciation per year for year 2
$
(0%)
Explanation / Answer
Hey Charger Your feedback is perfectly correct. Depreciable Base is the starting point of anydepreciation. At the time of purchase , Cost less salvage valueis the depreciable base At the point of revision, Book Value less SalvageValue becomes the depreciable Base. Hence , I would say Good Job !!