Do It! Review 9-2b x Your answer is incorrect. Try again. Indigo Corporation pur

Question

Do It! Review 9-2b x Your answer is incorrect. Try again. Indigo Corporation purchased a piece of equipment for $59,700. It estimated a 7-year life and $3,300 salvage value. At the end of year 3 (before the depreciation adjustment), it estimated the new total life to be 9 years and the new salvage value to be $5,100. Compute the revised depreciation. Company uses straight-line depreciation method. (Round answer to o decimal places, e.g. 125.) Revised depreciation Revised depreciation C 5 071 5071

Explanation / Answer

Equipment value = $59,700

Life 7 years

Salvage value =$3,300

Depriciation annually =( $59,700-$3,300)/7

=$8,057

Depreciation for 3 years is $24,171(8,057*3)

After 3 year

Asset value is ($59,700-$24,171) $35,529

New estimated life = 9 years

Salvage value = $5,100

AnnualDepreciation =(New asset value - new scrab value)/ new life

=($35,529-$5,100)/6

=$5,071

Annual revised depreciation is $5,071. But question is asking for Revised depreciation not Annual Revised Depreciation

Revised depreciation is $30,426($3,381*6)

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