Meca Concrete purchased a mixer on January 1, 2016, at a cost of $39,600. Straight-line depreciation...

Meca Concrete purchased a mixer on January 1, 2016, at a cost of $39,600. Straight-line depreciation for 2016 and 2017 was based on an estimated eight-year life and $2,400 estimated residual value. In 2018, Meca revised its estimate and now believes the mixer will have a total service life of only six years, and that the residual value will be only $1,400. Compute annual depreciation for 2018 and 2019.

Annual depreciation for 2018 and 2019-

Expert Solution

Depreciation for 2018= $7,225

Depreciation for 2019= $7,225

Straight line Method for 2016 and 2017
A	Cost	$ 39,600.00
B	Residual Value	$ 2,400.00
C=A - B	Depreciable base	$ 37,200.00
D	Life [in years]	8
E=C/D	Annual SLM depreciation	$ 4,650.00

Depreciation schedule For 2016 and 2017
Year	Book Value	Depreciation expense	Ending Book Value	Accumulated Depreciation
2016	$ 39,600.00	$ 4,650.00	$ 34,950.00	$ 4,650.00
2017	$ 34,950.00	$ 4,650.00	$ 30,300.00	$ 9,300.00

Straight line Method for 2018 and 2019
A	Cost	$ 30,300.00
B	Residual Value	$ 1,400.00
C=A - B	Depreciable base	$ 28,900.00
D	Life [in years left ] (6-2)	4
E=C/D	Annual SLM depreciation	$ 7,225.00

ekkarill92 answered 9 months ago

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