Question

Apex Fitness Club uses straight-line depreciation for a machine costing $25,550, with an estimated four-year life and a $3,000 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 $2,550 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the machine's book value at the end of its second year. $ 25,550 Book Value at the End of Year 2: Cost Accumulated depreciation 2 years Book value at point of revision $ 25,550 < Required 1 Required 2 >

I'm getting cent values and it's throwing me off. Steps please!

Answer 1

1) Calculate book value second year

Cost	25550
Accumulated depreciation (25550-3000/4*2)	-11275
Book value	14275

2) Calculate revised annual depreciation

Book value at point of revision	14275
Revised salvage value	2550
remaining depreciable cost	11725
Years of life remaining	3
Revised annual depreciation years 3-5	3908