Equipment was acquired on January 1, 2013, at a cost of $75,000. The equipment was originally estimated to have a salvage value of $5,000 and an estimated life of 10 years. Depreciation has been recorded through December 31, 2016, using the straight-line method. On January 1, 2017, the estimated salvage value was revised to $7,000 and the useful life was revised to a total of 8 years. (A) Calculate the book value at the time of the revision (January 1, 2017). (B) Determine the depreciation expense for 2017
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Equipment was acquired on January 1, 2013, at a cost of $75,000. The equipment was originally
estimated to have a salvage value of $5,000 and an estimated life of 10 years.
recorded through December 31, 2016, using the straight-line method. On January 1, 2017, the estimated
salvage value was revised to $7,000 and the useful life was revised to a total of 8 years.
(A) Calculate the book value at the time of the revision (January 1, 2017).
(B) Determine the depreciation expense for 2017
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