Question

Revision of Depreciation

Associated Clinic purchased a special machine for use in its laboratory on January 2, 2013. The machine cost $144,000 and was expected to last 10 years. Its salvage value was estimated to be $8,000. By early 2015, it was evident that the machine will be useful for a total of only seven years. The salvage value after seven years was estimated to be $9,500. Associated Clinic uses straight-line depreciation. Compute the proper depreciation expense on the machine for 2015. Round your answers to the nearest dollar.

Depreciation Expense for 2015: $

Answer 1

The answer is 21460

The depreciation expense for 2013 and 2014.

Cost of machine = 144000

useful life = 10 Years

Depreciation Base = Cost - Salavage Value = 144000 - 8000 = 136000

Yearly Depreciation Will be =Depreciation Base / Useful Life = 136000 / 10 = 13600

2013 Depreciation = 13600

2014 Depreciation = 13600

Net Book Value after 2014 or begining of 2015 = Cost - depreciation fpr 2013 and 2014

= 144000 - 13600 - 13600 = 116800

in 2015 the data chnages

Net Book Value = 116800

Salvage Value = 9500

Remaining Useful Life = 5 Years (Estimated asset have total 7 years of useful life and 2 years already depreciated)

The Depreciation Base will be = Net Book Value - Salvage Value = 116800 - 9500 = 107300

The Yearly Depreciation will be = Depreciation Base / remaining use ful life = 107300 / 5 = 21460

The deprecaition for 2015 is 21460