Apex Fitness Club uses straight-line depreciation for a machine costing $21,250, with an estimated four year life and a $2,550 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,100 salvage value.
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| (1) |
Compute the machine’s book value at the end of its second year. (Do not round your intermediate calculations.)
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| (2) |
Compute the amount of depreciation for each of the final three years given the revised estimates. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)
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| (1) |
| Two years' accumulated depreciation [($21,250 – $2,550) / 4 years] × 2 years = $9,350 |
| (2) |
Revised annual depreciation = $9,800 / 3 years = $3,267
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