A machine has a book value of $500,000 and remaining useful life of 5 years before...
A machine has a book value of $500,000 and remaining useful life of 5 years before an addition was made costing $50,000 that extended its useful life 3 more years. What is the new depreciation rate assuming the machine has no salvage value?
Homework Answers
Book Value of Machine = $500,000
Add: Additional cost = $50,000
Total Cost (Revised) = $550,000
Estimated useful life (revised) = 5 + 3 = 8 years
New Depreciation rate = 1 / Estimated useful life
New Depreciation rate = 1 / 8
New Depreciation rate = 0.125
So, New Depreciation rate = 12.50%
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