Chapter 9 No results Options Fird on pae the compary ex Tim 2-100 points MC Qu.2
ID: 2562153 • Letter: C
Question
Chapter 9 No results Options Fird on pae the compary ex Tim 2-100 points MC Qu.245 When originally purchased, a vehicle When onginaly purchased, a vehicle had en estimated useful Ife of 12 years. T ts estmated residual volue ts $2.000. Aher 3 years of straight ine degreciation, the asses total useful ife was revised from 12 years to 13 years and there was no change in the estimaced The Depreciation Experse in year 4 estimated residual value S4 22s O $4,821 O $757 O $4500 Multiple Choice MC Qu 245 when onginally Objective 09-52 Caliculate clanges in Type here to searchExplanation / Answer
For first three years, annual depreciation and book value will be as follows
Straight Line method
Annual Depreciation = (Machine cost - salvage value)/ useful years
Annual Depreciation= (47000 - 2000)/ 10
= (45000)/ 10
= 4500
Straight Line Depreciation Schedule
Year
Annual Depreciation
Accumulated Depreciation
Book value
1
4500
4500
42500
2
4500
9000
38000
3
4500
13500
33500
After year 3 management has decided that asset life will be reduced from 12 to 10 years, so remaining life of asset is 7 years,
Now annual depreciation will be calculated as follows
Book value 33500 will be machine cost in the calculation
Annual Depreciation = (Machine cost - salvage value)/ useful years
Annual Depreciation= (33500 - 2000)/ 7
= (31500)/ 7
= 4500
So correct answer is D.
Straight Line Depreciation Schedule
Year
Annual Depreciation
Accumulated Depreciation
Book value
1
4500
4500
42500
2
4500
9000
38000
3
4500
13500
33500