Question

Compute the machine’s book value at the end of its second year. And compute the amount of depreciation for each of the final three years given the revised estimates.

Apex Fitness Club uses straight-line depreciation for a machine costing $28,300, with an estimated four-year life and a $2,650 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 $2,200 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. * Answer is not complete. 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. $ 28,300 Book Value at the End of Year 2: Cost Accumulated depreciation 2 years Book value at point of revision

Answer 1

,Depreciation expense per year = $28,300-2,650 / 4 = $6,412.5

1.

Book value at the end of year 2
Cost	$28,300
Accumulated depreciation 2 years ($6,412.5*2)	12,825
Book value at point of revision	$15,475

2.

Revised depreciation (Years 3-5)
Book value at point of revision	$15,475
Revised salvage value	2,200
Remaining depreciable cost	13,275
Years of life remaining	3
Revised annual depreciation years 3-5 ($13,275/3)	$4,425