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On July 1, 2019, Sunland Company purchased new equipment for $80,000. Its estimated useful life was...

On July 1, 2019, Sunland Company purchased new equipment for $80,000. Its estimated useful life was 8 years with a $20,000 salvage value. On December 31, 2022, the company estimated that the equipment’s remaining useful life was 10 years, with a revised salvage value of $5,000.

Compute the revised annual depreciation on December 31, 2022.

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Answer #1
Annual dep on original terms
Annual Depreciation = (Cost Of The Asset- Salvage Value)/ Life Of The Asset
= $80000-20000/8 years
= $7500 per year
Dep for 2019 =7500/12*6
=3750
Accumulated depreciation till December 31st 2022
=$3750+7500+7500+7500
=$26250
Book value till December 31st 2022
=$80000-26250
=$53750
Revised depreciation
Annual Depreciation = (Cost Of The Asset- Salvage Value)/ Life Of The Asset
= $53750-5000/10 years
= $4875 per year
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