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Farmer Company purchased machine on January 1, Year 1 for $116,000. The machine is estimated to...

Farmer Company purchased machine on January 1, Year 1 for $116,000. The machine is estimated to have a 5-year life and a salvage value of $17,000. The company uses the straight-line method. At the beginning of Year 4, Farmer revised the expected life to eight years. What is the annual amount of depreciation expense for each of the remaining years in the machine’s life?

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Depreciation Expenses Year Year Year 2 $ Year 3 $ Year 4 Year 5 Year 6 Year 7$ Year 8 Tota Straight-Line Method 19,800 19,800 19,800 7,920 7,920 7,920 7,920 7,920 99,000 Straight line Depreciation Machine Cost = $116,000 Salvage value $17,000 Estimated useful life 5 years Depreciation (Cost of asset Residual Value)/Useful = ($116,000-$17,000/5 = $19,800 Book value at the beginning of 4th Year $116,000-($19,800*3) $56,600 Revised Useful Life of Machine = 8 years Remaining useful Life 8-3 5 years Revised Depreciation-($56,600-$17,000/5 = $7,920

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