Apex FitnessClub uses straight-line depreciation for a machine costing $28,250,w
ID: 2457553 • Letter: A
Question
Apex FitnessClub uses straight-line depreciation for a machine costing $28,250,with an estimated four-year life and a $2,100 salvage value. At thebeginning of the third year, Apex determines that the machine hasthree more years of remaining useful life, after which it will havean estimated $1,650 salvage value. Compute (1) the machine's bookvalue at the end of its second year and (2) the amount ofdepreciation for each of the final three years given the revisedestimates.
(1)
Machine's book value at the end of itssecond year. (Do not round the depreciation of each year.Round the total depreciation for two years to a wholenumber.)
Bookvalue
$
(2)
Depreciation amount for each of the finalthree years given the revised estimates. (Round each answerto the nearest whole dollar amount.)
Year1
$
Year2
$
Year3
$
(1)
Machine's book value at the end of itssecond year. (Do not round the depreciation of each year.Round the total depreciation for two years to a wholenumber.)
Explanation / Answer
4 Years
Straight Line
(28,250-2100 ) /4
6,537.50
Machine's Book Value at
28 ,250 - ( 6,537.50 * 2 )
the end of second year
15,175.00
After Revision ,
Depreciation amount for each
( 15,175 - 1,650 ) / 3
of the three years
4,508.33
Depreciation for final years
Year1
4,508.00
Year2
4,508.00
Year3
4,508.00
Original Scenario Cost of the Machine 28,250.00 Salvage Value 2,100.00 Life of the Machine4 Years
Method of DepreciationStraight Line
Depreciation Per Year(28,250-2100 ) /4
6,537.50
Machine's Book Value at
28 ,250 - ( 6,537.50 * 2 )
the end of second year
15,175.00
After Revision ,
Depreciation amount for each
( 15,175 - 1,650 ) / 3
of the three years
4,508.33
Depreciation for final years
Year1
4,508.00
Year2
4,508.00
Year3
4,508.00
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