Question

On January 1, 2022, the Ivanhoe Company ledger shows Equipment $48,300 and Accumulated Depreciation $17,720. The depreciation resulted from using the straight-line method with a useful life of 10 years and a salvage value of $4,000. On this date, the company concludes that the equipment has a remaining useful life of only 2 years with the same salvage value. Compute the revised annual depreciation.

Answer 1

$13,290

Step-by-step explanation:

Straight line depreciation expense = (book value of asset - salvage value ) / useful life

Book value of the asset = $48,300 - $17,720 = $30,580

($30,580 - $4,000) / 2 = $13,290