Question

On January 1, Year 1, Poultry Processing Company purchased a freezer and related installation equipment for $69,600. The equipment had a three-year estimated life with a $4,500 salvage value. Straight-line depreciation was used. At the beginning of Year 3, Poultry Processing revised the expected life of the asset to four years rather than three years. The salvage value was revised to $3,500.
Required Compute the depreciation expense for each of the four years, Year 1-Year 4
Depreciation Expense
Year 1
Year 2
Year 3
Year 4

Answer 1

Answer:

Depreciation Expense

Year 1 = $21,700

Year 2 = $21,700

Year 3 = $11,350

Year 4 = $11,350

Explanation:

depreciation expense for years 1 and 2 = ($69,600 - $4,500) / 3 = $21,700

book value at the end of year 2 = $26,200

depreciation expense for years 3 and 4 = ($26,200 - $3,500) / 3 = $11,350