Change in Estimate Assume that Bloomer Company purchased a new machine on Januar

Question

Change in Estimate

Assume that Bloomer Company purchased a new machine on January 1, 2017, for $80,000. The machine has an estimated useful life of nine years and a residual value of $8,000. Bloomer has chosen to use the straight-line method of depreciation. On January 1, 2019, Bloomer discovered that the machine would not be useful beyond December 31, 2022, and estimated its value at that time to be $2,000.

Required:

1. Calculate the depreciation expense, accumulated depreciation, and book value of the asset for each year 2017 to 2022. If necessary, round any depreciation calculations to the nearest dollar.

Year Depreciation
Expense Accumulated
Depreciation
Book Value 2017 $ $ $ 2018 2019 2020 2021 2022

Explanation / Answer

1. Calculate the depreciation expense, accumulated depreciation, and book value of the asset for each year 2017 to 2022.

Original Straight line dep = 80000-8000/9 = 8000 per year

Revised depreciation = (80000-16000-2000)/4 = 15500 per year

Year Depreciation
Expense Accumulated
Depreciation Book value 2017 8000 8000 72000 2018 8000 16000 64000 2019 15500 31500 48500 2020 15500 47000 33000 2021 15500 62500 17500 2022 15500 78000 2000

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