Question

Sholpan Company purchased a machine for $90,000. The machine had an estimated residual value of $6,000...

Sholpan Company purchased a machine for $90,000. The machine had an estimated residual value of $6,000 and an estimated useful life of 8 years. After two full years of experience with the machine, it was determined that its total useful life would be only 5 years instead of 8. The estimated residual value remains unchanged at $6,000. Compute depreciation expense for the third year. Sholpan Company uses straight-line depreciation.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:

Depreciation expense in year 3 is $21000.

Explanation:

Depreciation expense using Straight line methods = (Cost of Machine - residual value) / useful life

= ($90000 - $6000) / 8

= $84000 / 8

= $10500

Accumulated Depreciation in two years = $10500 * 2 = $21000

Book value After two years = Cost of Machine - Accumulated Depreciation in two years

= $90000 - $21000

= $69000

Now according to question total useful life will be 5 years;

Depreciation expense in year 3 = (Book value of Machine - Residual value) / Remaining useful life

($69000 - $6000) / 3

= $63000 / 3

= $21000.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1 Payne Company purchased equipment in 2010 for $90,000 and estimated a $6,000 residual value at...
1 Payne Company purchased equipment in 2010 for $90,000 and estimated a $6,000 residual value at the end of the equipment's 10-year useful life. At December 31, 2016, there was $58,800 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2017, the equipment was sold for $26,000. Please prepare the appropriate journal entries to remove the equipment from the books of Payne Company on March 31, 2017.
On January 1, 2017, a machine was purchased for $90,000. The machine has an estimated residual...
On January 1, 2017, a machine was purchased for $90,000. The machine has an estimated residual value of $6,000 and an estimated useful life of 5 years. The machine can operate for 100,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follow; 2017, 20,000 hours; 2018, 25,000 hours; 2019, 15,000 hours; 2020, 30,000 hours; and 2021, 10,000 hours. ((((((((((((((Instructions)))))))))))))))) A) Compute the annual depreciation charges over the machine’s...
A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful...
A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of four years. The company uses straight-line depreciation. Required: 1. Calculate the machine's depreciable cost. 2. Calculate the amount of depreciation expense that will be taken on the machine each year. 3. Calculate the machine's accumulated depreciation and book value at the end of each year.
EXPLAIN ABC Inc purchased a machine on January 1, 2015, for $111,433. At the time of...
EXPLAIN ABC Inc purchased a machine on January 1, 2015, for $111,433. At the time of purchase, the machine was estimated to have a life of seven years and a residual value of $37,750. On January 1 2017, the company determined that the machine had a total useful life of ten years (another eight years left) and a residual value of $45,000. If the company uses the straight-line method of depreciation, what will be the depreciation expense for the machine...
manna manufacturing purchased a machine on january 1, 2015 for $ 42,750. at the time of...
manna manufacturing purchased a machine on january 1, 2015 for $ 42,750. at the time of purchase. the machine was estimated to have a life of four years and a residual value of $7,750. on january 1, 2017, munna determined that the machine had a total useful life of seven years (another five years) and a residual value of $ 4500. if manna uses the straight line method of depreciation, what will be the depreciation expense for the machine in...
Delta Machine Company purchased a computerized assembly machine for $135,000 on January 1, 2018. Delta Machine...
Delta Machine Company purchased a computerized assembly machine for $135,000 on January 1, 2018. Delta Machine Company estimated that the machine would have a life of four years and a $25,000 salvage value. Delta Machine Company uses the straight-line method to compute depreciation expense. At the beginning of year 3 (2020) Delta discovered that the machine was quickly becoming obsolete and would have little value at the end of its useful life. Consequently, Delta Machine Company revised the estimated salvage...
An asset was purchased for $140,000. It had an estimated salvage value of $35,000 and an...
An asset was purchased for $140,000. It had an estimated salvage value of $35,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $28,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in Year 6 would be 11900. explain how
Trainor Corporation purchased equipment at a cost of $500,000. The equipment has an estimated residual value...
Trainor Corporation purchased equipment at a cost of $500,000. The equipment has an estimated residual value of $50,000 and an estimated life of 5 years, or 10,000 hours of operation. The equipment was purchased on January 1, 2020 and was used 2,500 hours in 2020 and 2,100 hours in 2021. On January 1, 2022, the company decided to sell the equipment for $315,000. Trainor Corporation uses the units-of- production method to account for the depreciation on the equipment. Based on...
A machine costs $800,000 on April 1, 2017. Its estimated salvage value is $90,000 and its...
A machine costs $800,000 on April 1, 2017. Its estimated salvage value is $90,000 and its expected life is eight years. It cost the company $100,000 to install and make the machine ready for full use. Record the depreciation expense by using straight-line for 2017.
When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost...
When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $51,000 and its estimated residual value is $2,000. After 3 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 years to 5 years and there was no change in the estimated residual value. The Depreciation Expense in year 4 is:
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT