MKG, Inc. paid $400,000 for a piece of equipment that is expected to have a 12 year useful life. In this industry the residual value of equipment is initially estimated at 10% of the asset's cost. On January 1, 2021 MKG Inc. performed an extraordinary repair on the equipment at a cost of $70,000 that extended the useful life to a total of 17 years and changed the residual value to $30,000. Assuming, MKG Inc. uses the straight-line depreciation method, calculate the amount of depreciation expense reported on the December 31, 2021 income statement? O $30,000 O $25,000 O $20,588 O $22,857 O None of the above.
MKG, Inc. paid $400,000 for a piece of equipment that is expected to have a 12 year useful life. In this industry the residual value of equipment is initially estimated at 10% of the asset's cost. On January 1, 2021 MKG Inc. performed an extraordinary repair on the equipment at a cost of $70,000 that extended the useful life to a total of 17 years and changed the residual value to $30,000. Assuming, MKG Inc. uses the straight-line depreciation method, calculate the amount of depreciation expense reported on the December 31, 2021 income statement? O $30,000 O $25,000 O $20,588 O $22,857 O None of the above.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...
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