Question

Equipment with a cost of $80,989.00, an estimated residual value of $6,709.00, and an estimated life of 13 years was depreciated by the straight-line method for 6 years. Due to obsolescence, it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

Select the correct answer.

$11,676.48

$5,189.55

$3,592.76

$34,283.08

Answer #1

Annual depreciation before changes | |||

Annual Depreciation = (Cost Of The Asset- Salvage Value)/ Life Of The Asset | |||

= $80989-6709/13 years | |||

= $5713.85 per year | |||

Accumulated depreciation at the end of year 6 | |||

=$5713.85*6 | |||

=$34283.10 | |||

Book value = $80989-34283.10 | |||

=$46705.90 | |||

Revised depreciation per year | |||

Revised life remaining life = 13-6-3 | |||

=4 years | |||

Annual Depreciation = (Cost Of The Asset- Salvage Value)/ Life Of The Asset | |||

= $46705.9-0/4 years | |||

= $11676.48 per year |
|||

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