Question

Problem 9-4A At the beginning of 2013, Mazzaro Company acquired equipment costing $105,400. It was estimated that this equipment would have a useful life of 6 years and a salvage value of $10,540 at that time. The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year. During 2015 (the third year of the equipment's life), the company's engineers reconsidered their expectations and estimated that the equipment's useful life would probably be 7 years (in total) instead of 6 years. The estimated salvage value was not changed at that time. However, during 2018, the estimated salvage value was reduced to $4,392. Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table. (Round answers to 0 decimal places, e.g. 5,275.) Year Depreciation Expense Accumulated Depreciation 2013 $ 2014 2015 2016 2017 2018 2019

Answer 1

Year	Depreciation expense	Accumulated Depreciation
2013	$                             15,810	$                                                            15,810
2014	$                             15,810	$                                                            31,620
2015	$                             12,648	$                                                            44,268
2016	$                             12,648	$                                                            56,916
2017	$                             12,648	$                                                            69,564
2018	$                             15,722	$                                                            85,286
2019	$                             15,722	$                                                         1,01,008
Workings:
Straight Line method:-
2013 and 2014
Depreciation expense	=	(Cost - Residual value) / useful value
	=	($105400 - $10540) / 6 years
	=	$                                                            15,810
2015, 2016 and 2017
Remaining book value	=	$105400 - $31620
	=	$                                                            73,780
Remaining useful life	=	7 years - 2 years
	=	5 years
Depreciation expense	=	(Book Value - Residual value) / useful value
	=	($73780 - $10540) / 5 years
	=	$                                                            12,648
2018 and 2019
Remaining book value	=	$105400 - $69564
	=	$                                                            35,836
Remaining useful life	=	7 years - 5 years
	=	2 years
Depreciation expense	=	(Book Value - Residual value) / useful value
	=	($35836 - $4392) / 2 years
	=	$                                                            15,722