Normal 1 No Spac.... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis St

Question

Normal 1 No Spac.... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles Situation 1: Blue Spruce Corporation purchased electrical equipment at a cost of $11,200 on June 2, 2014. From 2014 through 2017, the equipment was depreciated on a straight-line basis, under the assumption that it would have a 10-year useful life and a $2,200 residual value. After more experience and before recording 2018's depreciation, Blue Spruce revised its estimate of the machine's useful life downward from a total of 10 years to 8 years, and revised the estimated residual value to $1,800. On April 29, 2019, after recording part of a year's depreciation for 2019, the company traded in the equipment on a newer model, and received a $3,600 trade-in allowance, even though the equipment's fair value was only $2,500. The new asset had a list price of $13,800 and the supplier accepted $10,200 cash for the balance. The new equipment was depreciated on a straight-line basis, assuming a seven-year useful life and a $1,200 residual value Determine the amount of depreciation expense reported by Blue Spruce for each fiscal year for the years ending December 31, 2014, to December 31, 2019. Year Depreciation expense 2014 2015 2016 2017 2019

Explanation / Answer

Working:

2014 525 2015 900 2016 900 2017 900 2018 1895 2019 1832

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