Question

CALCULATOR INTER VERSION BACK MET Problem 9.04A At the beginning of 2010. Marigold Corp. acquired eviment couting $175,600. It was estimated that this couipment would have a useful life of years and a salvage value of $17,560 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 2020 (the third year of the equipment's life), the company's engineers reconsidered the expectations and estimated that the equipment's useful We would probably be 7 years in total) instead of 6 years. The estimated salvage value was not changed at that time. However, during 2023, the estimated salape value was reduced to $5.000, Indicate how much depreciation expere should be recorded each year for this event, by completing the following table Depreciation Accumulated Year Expense Depreciation 2018 2010 2020 2021 2022 2023

Answer 1

1. Answer -

Year	Depreciation Expense	Accumulated Depreciation
2018	$26340	$26340
2019	$26340	$52680
2020	$21072	$73752
2021	$21072	$94824
2022	$21072	$115896
2023	$27352	$143248
2024	$27352	$170600

Calculation:

Cost of equipment = $175600

Salvage value = $17560 [For first five years]

Salvage value = $5000 [For Year 2023 and 2024]

Useful life = 6 years [For first two years]

Useful life = 7 years [For remaining years]

Straight-line method:

Depreciation expense = (Cost of equipment - Salvage value) / Useful life

For Year 2018 and 2019

Depreciation expense = ($175600 - $17560) / 6 years

Depreciation expense = $26340 for each of two years

For Year 2018

Accumulated depreciation = $26340

For Year 2019

Accumulated depreciation = $26340 + $26340 = $52680

Book value of equipment at the end of year 2019 = $175600 - $52680 = $122920

For Year 2020, 2021 and 2022

Here, Useful life of equipment is 7 years instead of 6 years

Therefore, Useful life of equipment = 5 years (7 - 2)

So,

Depreciation expense = ($122920 - $17560) / 5 years

Depreciation expense = $21072 for each of three years

For Year 2020

Accumulated depreciation = $52680 + $21072 = $73752

For Year 2021

Accumulated depreciation = $73752 + $21072 = $94824

For Year 2022

Accumulated depreciation = $94824 + $21072 = $115896

Book value of equipment at the end of year 2019 = $175600 - $115896 = $59704

For Year 2023 and 2024

Here, Salvage value was reduced to $5000

And useful life of equipment = 2 years (7 - 5)

Therefore,

Depreciation expense = ($59704 - $5000) / 2 years

Depreciation expense = $27352 for each of two years

For Year 2023

Accumulated depreciation = $115896 + $27352 = $143248

For Year 2024

Accumulated depreciation = $143248 + $27352 = $170600

Please give me a Thumbs up ?.Thanks!!