Revision of Depreciation Associated Clinic purchased a special machine for use i

Question

Revision of Depreciation Associated Clinic purchased a special machine for use in its laboratory on January 2, 2010. The machine cost $104,000 and was expected to last 10 years. Its salvage value was estimated to be $6,000. By early 2012, it was evident that the machine will be useful for a total of only seven years. The salvage value after seven years was estimated to be $7,500. Associated Clinic uses straight-line depreciation. Compute the proper depreciation expense on the machine for 2012. Round your answers to the nearest dollar.

Explanation / Answer

2010 depreciation estimate a Machine cost       104,000.00 salevage value           6,000.00 Depreciable value         98,000.00 Useful life                   10.00 Years SL depreciation per year           9,800.00 b Depreciation charges of 2010           9,800.00 c Depreciation charges of 2011           9,800.00 d Book Value of machine in early 2012=a-b-c=         84,400.00 Revised salvage value           7,500.00 e Revised depreciable value         76,900.00 Remaining useful life                      5.00 years Revised depreciation expense for 2012 by SL method=e/5         15,380.00

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