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    Salvage Value and Depreciation

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    A company purchased a machine for $75,000 that was expected to last 6 years and to have a salvage value of $6,000. At the beginning of the machine's fourth year the company decided that the machine's estimated useful life should be revised to a total of 10 years instead of 6 years. Also, the salvage value was re-estimated to be $5,500. Straight-line depreciation was used throughout the machine's life. Calculate the depreciation expense for the fourth year of the machine's useful life.

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    Solution Preview

    Purchase Value of machine = $75000
    Useful life = 6 years
    Salvage value = $6000

    Depreciation per year (Initially) = (Purchase ...

    Solution Summary

    Solution describes the steps to calculate the depreciation expense for the desired period in case of revision in useful life estimates.