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miv72 [106K]
3 years ago
6

On January 1, 20X2, X Company made modifications to an asset used in its manufacturing operations in order to extend its useful

life. The asset had an original cost of $30,000 and accumulated depreciation of $12,000, with a remaining useful life of 5 years. As a result of the modification, which cost $6,000, the remaining useful life was increased to 8 years. If X Company uses straight-line depreciation, in 20X2, X Company: ________
Business
1 answer:
sp2606 [1]3 years ago
8 0

Answer:

The answer is: Will increase the asset value by $6,000 (total asset value $24,000) and record depreciation expenses by $3,000 per year (for 8 years of remaining useful life)

Explanation:

The value of the asset modified will change from $18,000 (the difference between $30,000 original cost minus $12,000 depreciation) to $24,000 including the repairs.

The depreciation expense can be calculated by dividing the new asset value ($24,000) by the new useful life of the asset (8 years) to $3,000 per year.

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