Question

On January 1, 2017, Nobel Corporation acquired machinery at a cost of $1,200,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2020, a decision was made to change the residual value to $100,000. The amount that Nobel should record as depreciation expense for 2020 is

Answer 1

WORKING NOTES: 1
	CALCULATION OF DEPRECIATION OF YEAR 1 & YEAR 2 AND BOOK VALUE AT END
	Purchase Cost of Machinary	$                12,00,000
	Less: Salvage Value	$                               -
	Net Value for Depreciation	$                12,00,000
	Deprecaiton per year = $ 110,000 / 10 Years =	$                  1,20,000
	Purchase value of Assets	$                12,00,000
	Less: Depreciation for year 2017	$                  1,20,000
	Less: Depreciation for year 2018	$                  1,20,000
	Less: Depreciation for year 2019	$                  1,20,000
	Book Value at the end of year 2019	$                  8,40,000
SOLUTION
	CALCULATION OF REVISE DEPRECIATION
	Book Value as at opening of the year	$                  8,40,000
	Less: Salvage Value	$                  1,00,000
	Net Value for Depreciation	$                  7,40,000
	Divide By	"/" By
	Pending Life of the Assets	7	Years
	Revise Depreciation per year = Net Value for Depreciation / Pending life of the assets	$                  1,05,714
	Answer = Depreciation of the year 2020 = $ 105,714