Question

On January 1, 2015, Lake Co. purchased a machine for $1,056,000 and calculated depreciation using the straight-line method, with an estimated useful life of eight years, and no salvage value. On January 1, 2018, Lake determined that the machine had a useful life of six years from the date of acquisition, and a salvage value of $96,000. An accounting change was made in 2018 to reflect these data. The accumulated depreciation for this machine should have a balance at December 31, 2018, of ________. Group of answer choices

Answer 1

$584,000

Step-by-step explanation:

The computation of the accumulated depreciation is shown below:

But before that following calculations need to be determined

Depreciation for 3 years = $1,056,000 ÷ 8 years × 3 years

= $396,000

Now the written down value is

= $1,056,000 - $396,000 - $96,000

= $564,000

For one year it would be

= $564,000 ÷ 3

= $188,000

Now the accumulated depreciation is

= $396,000 + $188,000

= $584,000