Question
In: Accounting
Hoover Corporation purchased equipment on January 1, 2019, for $610,000. In 2019 and 2020, Hoover depreciated...
Hoover Corporation purchased equipment on January 1, 2019, for $610,000. In 2019 and 2020, Hoover depreciated the asset on a straight-line basis with an estimated useful life of 8 years and a $10,000 residual valie. In 2021, due to changes in technology, Hoover revised the useful life to a total of four years with no residual value. What depreciation would Hoover record for the year 2021 on this equipment?
a) $98,641
b) 230,000
c)100,000
d)72,000
Solutions
Expert Solution
formula for depreciation after the change in useful life = (cost-Revised residual value-accumulated depreciation)/remaining useful life
- cost = $610,000
- revised residual value = $0
- accumulated depreciation = depreciation charged in 2019 & 2020
2019 =cost -salvage/useful life
=$610,000-10,000/8
=$75,000
2020= same $75,000
accumulated depreciation upto 2020 December= $75,000+75,000 =$150,000
- remaining useful life = revised useful life- years for which depreciation already provided
=4-2 (2019,2020)
=2
=$230,000
Thus, answer is b) $230,000
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ekkarill92 answered 1 year agoRelated Solutions
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