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kramer
3 years ago
14

Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvag

e value. At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year.
Business
2 answers:
Gre4nikov [31]3 years ago
5 0

Answer:1850

Explanation:

lisov135 [29]3 years ago
4 0

Answer:

According to the straight-line depreciation, this number can be obtained by dividing the difference between an asset's cost and its expected salvage value.

<u>Depreciation</u> = Asset's Cost - Expected Salvage Value ÷ Expected Years of use

Explanation:

In the case of Tops Co., they purchase equipment for $12,000 - $500 of Salvage Value expected ÷ 5  Expected years of use

The estimated depreciation will be $2,300 for 5 years

At the beginning of the third year Tops Co. decided to use the equipment for 6 years and no salvage value.

The remaining purchase value will be $12,000 - $2,300 (x3) = $5,100

Apply again the formula described above and our answer will be:

The revised estimated depreciation is $1,700 for the remaining three years.

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