Question

Emmar Co. purchased a machine on January 1, 2013 at a cost of 240000. The machine had been estimated eight year life with no residual value. Emmar uses straight line depreciation. At december 31, 2016. Emmar estimated that the machine would have only two more years of remaining life with no residual value. For 2016, Emmar would report delectation expense of

Answer 1

For 2016, Emmar would report delectation expense of $12,857.14 or $12,857

Straight line Method for 2013 and onwards
A	Cost	$     2,40,000.00
B	Residual Value	$                        -
C=A - B	Depreciable base	$     2,40,000.00
D	Life [in years]	8
E=C/D	Annual SLM depreciation	$        30,000.00

Depreciation schedule for first 4 years till dec 2016
Year	Book Value	Depreciation expense	Ending Book Value	Accumulated Depreciation
2013	$   2,40,000.00	$        30,000.00	$   2,10,000.00	$      30,000.00
2014	$   2,10,000.00	$        30,000.00	$   1,80,000.00	$      60,000.00
2015	$   1,80,000.00	$        30,000.00	$   1,50,000.00	$      90,000.00

Straight line Method for 2016 and onwards
A	Cost	$        90,000.00
B	Residual Value	$                        -
C=A - B	Depreciable base	$        90,000.00
D	Life [in years left ]	7
E=C/D	Annual SLM depreciation	$        12,857.14