Question
On July 1, 2017, Sport Company purchased for $3,600,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of
On July 1, 2017, Sport Company purchased for $3,600,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $150,000. Depreciation is taken for the portion of the year the asset is used.
During 2019, the company determined that the equipment would be useful to the company for only one more year beyond 2019. Salvage value is estimated at $200,000. What is the depreciation base of this asset?
Please help me understand how to calculate the depreciation base. I've seen some answers on this forum that calculate a net book value by 2019, but my textbook just uses cost less salvage value without taking into account accumulated depreciation for each year, so I am confused as to which approach is correct. Thanks!
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