Calculating revised depreciation
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My ledger shows equipment = 64,000, accumulated depreciation = 18,000 you use straight line method with a 10 yr useful life and 4,000 salvage and then on this date of jan. 1 2007 it is determined that the useful life is only 5 yrs but the salvage value is the same. compute the revised annual depreciation.
I came up with:
equip= 64,000 accum. dep. = 18,000
(64,000 + 18,000- 4,000 = 78,000
annual depreciation = 78,000 / 5= 15,600.00
But I think it could be:
64,000 -18,000- 4,000= 42,000 annual depreciation = 42,000 / 5 = 8,400.00
Please explain which way it should be and tell me if this is what the answer should look like or show me what it should look more like if possible.
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Solution Summary
The solution explains how to calculate the revised depreciation if there is a change in useful life
Solution Preview
When useful life is revised, we start with the existing book value and then calculate ...
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