Answer:
The revised depreciation expense for the second year = Depreciation expense for the third years = $23,925
Explanation:
The Matthews Bandy uses straight-line depreciation method, Depreciation Expense per year is calculated by following formula:
Depreciation Expense = (Cost of equipment − Salvage Value )/Useful Life
For the first year,
Depreciation Expense = ($65,800 - $2,000)/4 = $15,950
At the end of the first year,
Book vale of the equipment = $65,800 - $15,950 = $49,850
At the start of the second year, this equipment will last only a total of three years ( remaining useful life 2 year) with a residual value of $2,000.
Depreciation Expense for second year = ($49,850 - $2,000)/2 = $23,925
Depreciation Expense for third year = $23,925
