Supreme Fitness Club uses straight-line depreciation for a machine costing $26,4

Question

Supreme Fitness Club uses straight-line depreciation for a machine costing $26,400, with an estimated four-year life and a $2,650 salvage value. At the beginning of the third year, Supreme determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,200 salvage value.

Compute the machine%u2019s book value at the end of its second year. (Omit the "$" sign in your response.)

Compute the amount of depreciation for each of the final three years given the revised estimates. (Do not round your intermediate calculations. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

How do i see the Connect questions for Fundamental Accounting Principles.

Compute the machine%u2019s book value at the end of its second year. (Omit the "$" sign in your response.)

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Depreciation Basis = 26400 - 2650 = 23750

Depreciation Per Year = 23750/4 = 5937.5

Machine's Book Value at the end of Second Year = 26400 - 5937.5*2 = 14525

Part B:

New Depreciation Basis = 14525 - 2200 = 12325

New Depreciation Expense Per Year = 12325/3 = 4108

Year 3 Depreciation = 4108

Year 4 Depreciation = 4108

Year 5 Depreciation = 4108

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.