Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a company purchased equipment at the beginning of

A company purchased equipment at the beginning of 2021 for $500,000. The equipment is depreciated on...

Free

50.1K

Verified Solution

Question

Accounting

A company purchased equipment at the beginning of 2021 for$500,000. The equipment is depreciated on a straight-line basiswith an estimated useful life of nine years and a $50,000 residualvalue. At the beginning of 2024, the company revised theequipment’s useful life to a total of seven years (four more years)because of changing customer demand. The company also revised theexpected residual value to $30,000. What depreciation expense wouldthe company record for the year 2024 on this equipment? MultipleChoice $80,000. $87,500. $50,000. $75,000.

Answer & Explanation Solved by verified expert
4.0 Ratings (692 Votes)

Correct answer--------$80,000

Working

Straight line Method For year 2021 to 2023
A Cost $ 500,000
B Residual Value $ 50,000
C=A - B Depreciable base $ 450,000
D Life [in years left ]                                  9
E=C/D Annual SLM depreciation $ 50,000

.

Depreciation schedule-Straight line method
Year Book Value Depreciation expense Accumulated Depreciation Ending Book Value
2021 $ 500,000 $ 50,000 $ 50,000 $ 450,000
2022 $ 450,000 $ 50,000 $ 100,000 $ 400,000
2023 $ 400,000 $ 50,000 $ 150,000 $ 350,000

.

Straight line Method -For 2024
A Carrying value at 2024 beginning $ 350,000
B Residual Value $ 30,000
C=A - B Depreciable base $ 320,000
D Life [in years left ]                                  4
E=C/D Annual SLM depreciation $ 80,000

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Accounting
1.2K views

On May 1, 2017, Bramble Company issued 1,400 $1,000 bonds at 102. Each bond was issued...

Biology
1.2K views

8 When involved in a person centered planning process the professional team members and the...

Geometry
1.2K views

8 An angle is inscribed in a 100 to The degree measures of th

Geometry
1.2K views

In the circle below suppose m GHE 122 and m ZHGF 68 Find the following...

Basic Math
1.2K views

The following is the graph of the function f On your paper draw a set...

Basic Math
1.2K views

The label on a 20 mL aminophylline vial indicates a strength of 500 mg/20 mL.(a)...

Basic Math
1.2K views

What is the value of the modulus of 6 - 4i?Enter your answer as a...

Calculus
1.2K views

uate the factorial 91 Type a whole number

Algebra
1.2K views

Find the value of x if LA and LB are complementary angles Express your answer...

Accounting
1.2K views

Beginning inventory, purchases, and sales for Item ER27 are as follows: Assuming a...

Accounting
1.2K views

will thumbs up Determine Due Date and Interest on Notes Determine...

Accounting
1.2K views

NEED ANSWERS AND SOLUT ASAP Suppose your give cash flow...