Question

Williams company purchased a machine costing $25,000 and is depreciating it over a 10-year estimated useful life with a residual value of $3,000. At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,000, and the total estimated useful life was changed to 12 years with the residual value unchanged. How much is the year 8 depreciation expense assuming use of the straight-line depreciation method?

Answer 1

Explanation:

the depreciation rate is 8.8 % it is charged till the 7th year

the net book value in the the beginning of earth year is 9600

new depreciation of 8th year is

(9600-3000)/X

X=remaning useful life is 5year

the amount of 8th year dep is 1320