Question

Apex Fitness Club uses straight-line depreciation for a machine costing $27,850, with an estimated four-year life and a $2,850 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 $2,400 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. 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. $ 27,850 Book Value at the End of Year 2: Cost Accumulated depreciation 2 years Book value at point of revision 6,250 21,600 $

Answer 1

	Depreciation expense
	(27,850-2,850)/4
	6250
	Book value at end of year 2:
1)	Cost				27,850
	Accumulated depreciation 2 years				12500
	book value at point of revision				15,350
2)	Revised Depreciation (3-5)
	Book value at point of revision				15,350
	Revised salvage value				2,400
	Remaining depreciable cost				12,950
	years of life remaining				3
	Revised annual depreciaiton (3-5 years)				4317