Answer:
Norbert should record at 2020 depreciation expense of $2,700 for the machine
Explanation:
The depreciable base can be calculated as follows;
depreciable base=acquisition cost-salvage value
where;
acquisition cost=$45,000
salvage value=$0
replacing;
depreciable base=45,000-0=$45,000
Annual depreciation expense=depreciable base/useful life
annual depreciation expense=45,000/15=$3,000
accumulated depreciation after 10 years=3,000×10=$30,000
New net book value=acquisition cost-accumulated depreciation+overhaul cost
New machine value=(45,000-30,000+12,000)=$27,000
New depreciation base=new machine value-salvage value
where;
new machine value=$27,000
salvage value=$0
replacing;
New depreciation base=27,000-0=$27,000
New Annual depreciation expense=new depreciation base/useful life
where;
new depreciation base=$27,000
useful life=5+5=10 years
replacing;
New Annual depreciation expense=27,000/10=$2,700
Norbert should record at 2020 depreciation expense of $2,700 for the machine
