Eckland Manufacturing Co. purchased equipment on January 1, 2016, at a cost of $90,900. Straight-line depreciation...

Eckland Manufacturing Co. purchased equipment on January 1, 2016, at a cost of $90,900. Straight-line depreciation for 2016 and 2017 was based on an estimated eight-year life and $2,100 estimated residual value. In 2018, Eckland revised its estimate and now believes the equipment will have a total service life of only six years, while the residual value remains the same.

Required:
Compute depreciation for 2018 and 2019.

Expert Solution

Depreciation for 2016 and 2017 = (cost -salvage )/original useful life

= (90900 - 2100 ) / 8

= 88800 / 8

= $ 11100 per year

so for 2 years ,accumulated dep = 11100 *2 = 22200

Book value at beginning of 2016 = 90900 -22200 = 68700

Revised remaining useful life = 6 - 2 expired = 4 years

Revised depreciation = (Book value -salvage )/remaining useful life

= (68700 - 2000)/ 4

= 66600 /4

= 16650 per year

Depreciation :

2018 - 16650

2019- 16650

ekkarill92 answered 2 years ago

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