Answer:
The Elmo Company
a. The amount of the depreciation expense recorded in year 1 = $3,000
b. The amount of the depreciation expense recorded in year 6 = $1,500
Explanation:
a) Data and Calculations:
Cost of equipment on January 1, Year 1 = $26,000
Estimated useful life = 8 years
Salvage value = $2,000
Depreciable amount = $24,000 ($26,000 - 2,000)
Annual depreciation expense = $3,000 ($24,000/8)
Accumulated depreciation after 5 years = $15,000 ($3,000 * 5)
Net book value after 5 years = $11,000
Sixth year appraisals:
Remaining useful life = 6 years
Salvage value = unchanged at $2,000
Depreciable value = $9,000 ($11,000 - 2,000)
Annual depreciation expense = $1,500 ($9,000/6)
