Do It! Review 9-2b Ayayai Corp. purchased a piece of equipment for $58,700. It e

Question

Do It! Review 9-2b Ayayai Corp. purchased a piece of equipment for $58,700. It estimated a 9-year life and $2,100 salvage value. At the end of year 4 (before the depreciation adjustment), it estimated the new total life to be 11 years and the new salvage value to be $4,600 Compute the revised depreciation. Company uses straight-line depreciation method. (Round answer to 0 decimal places, e.g. 125.) Revised depreciation$ €1lliedh iff Ygil l yeon 1@? lii * Sli 7 YSfe iti ?w i' tiniies (1 e talii gli :: pen ow or s LINK TO TEXT

Explanation / Answer

Answer:

Current Situation:
Depreciation per Year = (58,700 – 2,100) / 9
Depreciation per Year = $6,289

Accumulated Depreciation for 3 years = $6,289 * 3
Accumulated Depreciation for 3 years = $18,867

After Change of Useful Life and Salvage Value:
Book Value on the date of Change = $58,700 - $18,867
Book Value on the date of Change = $39,833

Revised Depreciation = (Book Value on date of change – Revised Salvage Value) / Remaining Life
Revised Depreciation = (39,833 – 4,600) / 8
Revised Depreciation = $4,404

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