Question
Machinery acquired new on January 1 at a cost of $200,000 was estimated to have a useful life of 10 years and a residual salvage
Machinery acquired new on January 1 at a cost of $200,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimated useful life had been too long and that the machinery would have to be retired after three more years, that is, at the end of the ninth year of service. Additionally, the market for the equipment had changed and management estimated that the salvage value at the end of the ninth year would be $44,000. Under this revised estimate, the depreciation expense for the seventh year of use would be: Select one: a. $16,000. b. $15,600. C. $20,000. d. $18,000. Machinery acquired new on January 1 at a cost of $200,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimated useful life had been too long and that the machinery would have to be retired after three more years, that is, at the end of the ninth year of service. Additionally, the market for the equipment had changed and management estimated that the salvage value at the end of the ninth year would be $44,000. Under this revised estimate, the depreciation expense for the seventh year of use would be: Select one: a. $16,000. b. $15,600. C.$20,000. d. $18,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started