Question

On January 1, 2022, the Blossom Company ledger shows Equipment $48,700 and Accumulated Depreciation $18,200. The depreciation resulted from using the straight-line method with a useful life of 10 years and a salvage value of $3,200. On this date, the company concludes that the equipment has a remaining useful life of only 2 years with the same salvage value. Compute the revised annual depreciation.

Answer 1

Answer:$13,650

Explanation:

The net book value as at Jan 1, 2022 is $30,500 ($48700-$18200). This means it has to be written off in two years after deducting the residual value of $3200 = ($30500-$3200)/2