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A company used straight-line depreciation for equipment that cost $12,000, had a salvage value of $2,000, and a 5-year useful life. At the beginning of year 4 of its useful life, the estimate of the salvage value was reduced to $1,200 and its total useful life was increased to 6 years. The amount of depreciation that will be recorded during each of the remaining years of its useful life is:

Respuesta :

Answer:

depreciation for remaining life is $1600

Explanation:

For the first 3 years the  -  value of assets = $12,000

                                           useful life          = 5 years

                                           salvage value   = $2000

DEPRECIATION FORMULA =

                  \frac{VALUE \: OF \: ASSETS \: - SALVAGE \: VALUE}{USEFUL \: LIFE \: YEARS}

= $12,000 - $2,000 / 5

= $2,000

So for first 3 years depreciation = $2000 x 3 = $6000

For remaining 2 years -  value of assets = $ 6000 ( $12,000 - $6,000 )

                                        useful life year  = 3 years ( useful year increased )

                                        salvage value   = $1200

DEPRECIATION FORMULA =

                  \frac{VALUE \: OF \: ASSETS \: - SALVAGE \: VALUE}{USEFUL \: LIFE \: YEARS}

= $ 6000 - $ 1200 / 3

= $4800 / 3

= $1600

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