Answer:
Tge residual values is $2,580
Explanation:
Given
Cost = $43,800
Time/Life = 8 years
Residual value = $3,000.
First, we calculate the depreciation.
Depreciation is calculated as follows;
Depreciation = (Cost - Residual)/Time
Depreciation = ($43,800 - $3,000)/8
Depreciation = $40,800/8
Depreciation = $5,100
Then we calculate the total depreciation before the beginning of year 6
Total Depreciation = $5,100. * (6 - 1)
Total Depreciation = $5,100 * 5
Total Depreciation = $25,500
So,the net value before year 6 is
Net Value = Cost - Total Depreciation
Net Value = $43,800 - $25,500
Net Value= $18,300
At the beginning of the sixth year, an extraordinary repair was made costing $7,500, so, extended repair value = $7,500 + $18,300 = $25,800
If the estimated useful life was extended to 15 years, then useful life = 15 - 5 = 10 years
Depreciation Expense Year 6 = Extended Repair Value/Useful Life
= $25,800/10
= $2,580
Hence, depreciation = $2,580
Answer:
The answer is $2,280
Explanation:
The formula for straight line depreciation method is:
(Cost - residual value)÷ number of useful years.
( $43,800 - $3,000) ÷ 8
=$5,100
Depreciation for 5 years will now be: $5100 x 5 = $25,500.
The carrying amount of the machine at the beginning of the sixth year will be:
$43,800 - $25,500
=$18,300.
The extraordinary repair of $7,500 will be capitalized. So we now have:
$18,300 + $7,500
=$25,800.
With this, the estimated useful life is now 15 years but we need to subtract the 5 years that had been used from 15 years. The new useful life is now 10years(15years - 5 years)
Therefore, depreciation for the sixth year is:
($25,800 - $3,000) ÷ 10
=$2,280
