reen Garden Company purchased a tractor at a cost of $240,000 onJanuary 1, 2015....

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Accounting

reen Garden Company purchased a tractor at a cost of $240,000 onJanuary 1, 2015. The tractor
has an estimated residual value of $40,000 and an estimated lifeof 8 years. At the end of two years
of service, Green Garden Co. reevaluated the tractor’s usefullife. Management extended the useful
life an additional four years, but estimated that the tractorwould have no residual value at the end of
this time.
If the company uses straight-line depreciation, what amountwould be recorded as the depreciation
expense each year, beginning with the third year?

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3.6 Ratings (321 Votes)

This is the case of revision in estimated life of the asset In case during the life of asset the company estiamte that the anticipate life of asset is higher than what they estimated before The remaining amount of asset is depreciated over the See Answer

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In: Accountingreen Garden Company purchased a tractor at a cost of $240,000 onJanuary 1, 2015. The...reen Garden Company purchased a tractor at a cost of $240,000 onJanuary 1, 2015. The tractorhas an estimated residual value of $40,000 and an estimated lifeof 8 years. At the end of two yearsof service, Green Garden Co. reevaluated the tractor’s usefullife. Management extended the usefullife an additional four years, but estimated that the tractorwould have no residual value at the end ofthis time.If the company uses straight-line depreciation, what amountwould be recorded as the depreciationexpense each year, beginning with the third year?