Question

Apex Fitness Club uses straight-line depreciation for a machine costing $21,000, with an estimated four-year life and a $2,450 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,000 salvage value.

Required:
1. Compute the machine’s book value at the end of its second year.
2. Compute the amount of depreciation for each of the final three years given the revised estimates.
  

	Revised Depreciation (Years 3-5) Book value at point of revision $11,725selected answer correct Revised salvage value 2,000selected answer correct Remaining depreciable cost 9,725selected answer correct Years of life remaining 3selected answer correct Revised annual depreciation years 3-5 ?

Can't find the revised annual depreciation years 3-5. Need help quick:) Please post explanation as well. Thank you.

Answer 1

	Original cost	$           21,000
Less:	Salvage value	$             2,450
	Depreciable cost	$           18,550
Divided by:	Useful life in years	4
	Annual depreciation	$       4,637.50
	Original cost	$           21,000
Less:	Accumulated depreiation at the end of two years	$             9,275
	Book value at the end second year	$           11,725
	Book value at point of revision	$           11,725
Less:	Revised salvage value	$             2,000
	Remaining depreciable cost	$             9,725
Divided by:	Remaining useful life in years	3
	Revised annual depreciation	$       3,241.67
	Revised annual depreciation (Rounded to dollars)	$             3,242

Revised salvage value and revised remaning useful life used to calculate the revised annual depreciation.