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Hoover Corporation purchased equipment on January 1,2019,for$610,000.In 2019 and 2020,Hoover depreciated the asset on a straight-line...

Hoover Corporation purchased equipment on January 1,2019,for$610,000.In 2019 and 2020,Hoover depreciated the asset on a straight-line basis with an estimated useful life
of eight years and a$10,000 residual value.In 2021,due to changes in technology,Hoover revised the useful life to a total of four years with no residual value.What
depreciation would Hoover record for the year 2021 on this equipment?(Round your answer to the nearest dollar amount.)

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Answer #1

Here,

Cost of equipment = $ 610000

Useful life of years= 8 years

Residual value = $ 10000

Depreciation for 2019 and 2020 under straight line method = (cost - residual value) /useful life of years

= ($ 610000 - $ 10000) /8 = $ 75000 per year

At the end of 2020 the book value of equipment=$ 610000-($ 75000*2) = $ 460000

Depreciation for the year 2021=(Book value - revised salvage value) /revised remaining useful life

=( $ 460000 - 0) /2 = $ 460000/2 = $ 230000.

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