Question
On January 1, 20X1, Jasmine, Inc. purchased a piece of exercise equipment for $120,000. The equipment has a useful life of 7 years and a
On January 1, 20X1, Jasmine, Inc. purchased a piece of exercise equipment for $120,000.
The equipment has a useful life of 7 years and a salvage value of $10,000.
Jasmine, Inc. uses the sum of the years digits method of calculating depreciation.
On January 1, 20X6, the company determined that the equipment wasn't going to last 7 years, so it reduced its useful life to 6 years in total, thus the equipment was in its final year of service.
Since the exercise equipment would be disposed of 1 year earlier, Jasmine, Inc. believed the salvage value would be increased to $12,000.
How much should Jasmine, Inc. record as depreciation expense on December 31, 20X6?
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