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shusha [124]
3 years ago
5

Bradley Company purchased a machine for $34,000 on January 1, 2017. It depreciates the machine using the straight-line method ov

er a useful life of 8 years and a $2,000 residual value. On January 1, 2019, Bradley revised its estimate of residual value to $1,000 and shortened the machine's useful life to 4 more years. Depreciation expense for 2019 is:
Business
1 answer:
Debora [2.8K]3 years ago
3 0

Answer:

$12,500

Explanation:

Depreciation Expense = (Book Value of machine - Residual Value)/Useful Life

                                    = ($34,000 - $2,000)/8

                                    = $4,000 per year

Depreciation Expense for years 2017 & 2018 would be $4,000 X 2 = $8,000

Net book Value on January 1, 2019 = $34,000 - $8,000 = $26,000

New Residual Value = $1,000

New Useful Life = 8 - 2 - 4 = 2 Years

Depreciation expense for 2019 = ($26,000 - $1,000)/2 = $12,500

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