Answer:
$3,100
Explanation:
We need to determine the carrying value of the machine after 8 years as a starting point in this analysis.
annual depreciation expense=cost-residual value/useful life
cost= $25,000
residual value=$3,000
useful life=10 years
annual depreciation expense=($25000-$3000)/10
annual depreciation expense=$2,200
accumulated depreciation for 8 years=$2,200*8=$17,600
carrying value after 8 years=cost-accumulated depreciation for 8 years
carrying value after 8 years=$25,000-$17,600=$7,400
The cost of the major overhaul would increase the carrying value with both amounts depreciation over the remaining 4 years since the useful life has been increased from 10 to 12 years
year 8 depreciation=(carrying value afte
year 8 depreciation=($7,400+$8,000-$r 8 years+cost of the overhaul-residual value)/remaining useful life 3,000)/4
year 8 depreciation=$3,100
