Apex Fitness Club uses straight-line depreciation for a machine costing $24,900,

Question

Apex Fitness Club uses straight-line depreciation for a machine costing $24,900, with an estimated four-year life and a $2,400 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $1,950 salvage value.

(1) Compute the machine’s book value at the end of its second year. (Do not round your intermediate calculations.)

(2) Compute the amount of depreciation for each of the final three years given the revised estimates. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)

Explanation / Answer

PART A COST AT BEGINNING 24900 (-) SALVAGE VALUE -2400 DEPRECIABLE VALUE FOR NEXT 4 YEARS 22500 (-) DEPRECIABLE FOR 1ST YEAR (22500/4) -5625 (-) DEPRECIABLE FOR 2ND YEAR (22500/4) -5625 VALUE AT THE END OF THE 2ND YEAR AND BEGINNING OF 3RD YEAR 11250 PART B BOOK VALUE AT BEGINNING OF 3RD YEAR 11250 (-) SALVAGE VALUE -1950 DEPRECIABLE VALUE FOR NEXT 3 YEARS 9300 (-) DEPRECIABLE FOR 1ST YEAR (9300/3) 3100 (-) DEPRECIABLE FOR 2ND YEAR (9300/3) 3100 (-) DEPRECIABLE FOR 3RD YEAR (9300/3) 3100

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.