Question

The band estimates it will use this equipment for four years, during which time it anticipates performing about 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During year 2008, the band performs 45 concerts. Assume that Cerritos Band chose straight-line depreciation but realizes early in the second year that due to concert bookings beyond expectations, this equipment will last only a total of three years. The salvage value remains unchanged. Compute the revised depreciation for the second year. Book value at point of revision $ Remaining depreciable cost $ Depreciation per year for year 2 $

Answer 1

Answer:

There are several question

Explanation:

You do not provide the equipment adquisition value.

I will help you with this incomplete question, by giving you the procedure to reach the answers of your problem:

The information about concerts is not useful to determinate the straight-line depreciation, so you will ignore that part, on striaght-line you must focus on the espected life of the long-term asset, the adquisition value and the salvage value.

For depreciation expense for year 1.

You will do (adquisition value - salvage value ($2,000)) /4 years

The first part means, the ammount from which the band purchase the equipment, less the ammount they can sell it at the end of his useful life. This will be the ammount subject to depreciation.

Last part will be to divide this by the useful life in year.

Book value at the moment of revision will be:

book value  = adquisition value - acumulated depreciation

Were the acumulated depreciation will be sum of the depreciation expense over the years. In this case we only have 1 depreciation so it will be

acumulated depreciation: dep expense year 1

Remaining depreciable cost at year 1 will be:

amount subject to depreciation  - acumulated depreciation

remember that amount subject to depreciation will be:

adquisition value - salvage value

and the acumulated depreciation is the sum of the depreication of each year.

For depreciation expense for year 2

Then you will do (adquisition value - salvage value) / 3 years

Because the expected life decrease this value will be higher than year 1