   Chapter 7, Problem 22CE ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

#### Solutions

Chapter
Section ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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# Revision of DepreciationOn January 1, 2017, Slade Inc. purchased a machine for \$90,000. Slade depreciated the machine with the straight-line depreciation method over a useful life of 10 years, using a residual value of \$4,000. At the beginning of 2019, a major overhaul, costing \$35,000, was made. After the overhaul, the machine’s residual value is estimated to be \$2,500, and the machine is expected to have a remaining useful life of 12 years.Required:Determine the depreciation expense for 2019.

To determine

When the estimates like useful life or residual value changes then Depreciation has to be revised. This revision of depreciation will have effect on current and future years.

To calculate:

To determine revised depreciation.

Explanation

Purchase Price - \$90,000

Useful Life- 10 years

Residual Value - \$4000

Existing Depreciation = (90000-4000)/10

= 8600 per year

Depreciation for 2017 and 2018 = 8600*2 = \$17200

Written down value as on 01...

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