Question

On January 1, 2021, THE Company purchased a piece of equipment that cost $160,000. The equipment...

On January 1, 2021, THE Company purchased a piece of
equipment that cost $160,000. The equipment had a ten
year life and a $28,000 salvage value assigned to it.

THE Company will depreciate the equipment using the
straight-line depreciation method.

On January 1, 2025, THE Company determined the life of
the equipment should be revised from 10 to 16 years.

Calculate the depreciation expense recorded on the
equipment for 2025.
Business   Accounting   
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Homework Answers

Answer #1

Straight line Depreciation :

Annual Depreciation : ( Cost - Salvage Value) / Life in years

= (160,000-28,000)/10 = 13,200

Depreciation from ( Jan 1st 2021 to Jan 1st 2015) = 13,200*4 = 52,800

Book Value on Jan 1st 2015 = 160,000-52,800 =107,200

Revised Life = From 10 years to 16 years

Remaining Life = 16-4 = 12 years

Revised Depreciation Per YEar = ( Book value - Salvage Value ) / Remaining Life

= (107,200-28,000)/ 12 = $6,600

Answer : Depreciation for 2025 = $6,600

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