Apex Fitness Club uses straight-line depreciation for a machine
costing $26,850, with an estimated four-year life and a $2,900
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 $2,450 salvage value.
Required:
1. Compute the machine’s book value at the end of
its second year.
2. Compute the amount of depreciation for each of
the final three years given the revised estimates.
Depreciation = (Cost - Salvage value) /Useful life
= (26,850-2900)/4 = 8987.50 per year
1. Book value = 26,850 - (5987.50*2)
= 14,875
2. Depreciation = (14,875 - 2,450)/3
= 4142
I have rounded some numbers. Comment if you face any issues. I will edit answer immediately
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