Question

tatsuo corporation purchased farm equipment on january 1, 2019, for $280,000. in 2019 and 2020, tatsuo depreciated the asset on a straight-line basis with an estimated useful life of five years and a $90,000 residual value. in 2021, due to changes in technology, tatsuo revised the residual value to $30,000 but still plans to use the equipment for the full five years. what depreciation would tatsuo record for the year 2021 on this equipment?

Answer 1

The depreciation recorded for the year 2021 on the farm equipment would be $83,333.33.

Step-by-step explanation:

To find the depreciation recorded for the year 2021, we need to determine the book value of the farm equipment at the beginning of the year. The book value is the original cost minus accumulated depreciation. From the information given, we know that the equipment was purchased for $280,000, depreciated on a straight-line basis over 5 years, and now has a revised residual value of $30,000.

To calculate the annual depreciation, we subtract the residual value from the original cost and divide by the remaining useful life.

For the year 2021, the depreciation would be:

(Original Cost - Revised Residual Value) / Remaining Useful Life

(280,000 - 30,000) / 3

= $83,333.33