Question
In: Accounting
Bridgeport Corp. purchased a piece of equipment for $36,000. It estimated a 8-year life and $1,440...
Bridgeport Corp. purchased a piece of equipment for $36,000. It
estimated a 8-year life and $1,440 salvage value. At the end of
year 4 (before the depreciation adjustment), it estimated the new
total life to be 10 years and the new salvage value to be
$2,880.
Compute the revised depreciation. Company uses straight-line
depreciation method. (Round answer to 0 decimal places,
e.g. 125.)
| Revised depreciation: ??? |
Solutions
Expert Solution
Correct Answer:
The revised depreciation: $ 2,640.00
working:
|
Straight line Method |
||
|
A |
Cost |
$ 36,000.00 |
|
B |
Residual Value |
$ 1,440.00 |
|
C=A - B |
Depreciable base |
$ 34,560.00 |
|
D |
Life [in years left ] |
8 |
|
E=C/D |
Annual SLM depreciation |
$ 4,320.00 |
|
Depreciation Schedule- Straight line method |
|||
|
End of year amounts |
|||
|
Year |
Book Value |
Depreciation expense |
Ending Book Value |
|
1 |
$ 36,000.00 |
$ 4,320.00 |
$ 31,680.00 |
|
2 |
$ 31,680.00 |
$ 4,320.00 |
$ 27,360.00 |
|
3 |
$ 27,360.00 |
$ 4,320.00 |
$ 23,040.00 |
|
4 |
$ 23,040.00 |
$ 4,320.00 |
$ 18,720.00 |
Book value of equipment after 4 years = $ 18720.00
New Depreciation Expense will be:
|
Straight line Method |
||
|
A |
Cost |
$ 18,720.00 |
|
B |
Residual Value |
$ 2,880.00 |
|
C=A - B |
Depreciable base |
$ 15,840.00 |
|
D |
Life [in years left ] ( 10-4 ) |
6 |
|
E=C/D |
New Annual SLM depreciation |
$ 2,640.00 |
End of Answer.
Thanks
ekkarill92 answered 2 years agoRelated Solutions
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