### Educational Website Content---**Question: Depreciation Calculation Using Straight-Line Method****Scenario:**Vaughn Company purchased a machine on January 1, 2019, for $59,000 with an estimated salvage value of $25,000 and an estimated useful life of 8 years. On January 1, 2021, Vaughn decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $25,000. **Question:**Using the straight-line method, the new annual depreciation will be:1. $25502. $28333. $34004. $4917---**Response Information:**- **Your answer is incorrect.****Explanation:**To calculate the new annual depreciation using the straight-line method, follow these steps:1. **Calculate Net Book Value at the Change Date (January 1, 2021):** - Initial Cost: $59,000 - Salvage Value: $25,000 - Estimated Useful Life: 8 years - Annual Depreciation (original): $\frac{59,000 - 25,000}{8} = 4,250$ - Depreciation for 2 years: 2 x $4,250 = $8,500 - Net Book Value (1 January 2021): $59,000 - $8,500 = $50,5002. **Recalculate Depreciation with Revised Useful Life:** - New Useful Life from 2019: 12 years - Remaining Life (as of 2021): 12 - 2 = 10 years - New Annual Depreciation: $\frac{50,500 - 25,000}{10} = $2,550$So, the correct answer is:- **$2,550**This comprehensive explanation details the straight-line depreciation recalculation process. **Feedback Section:**Feel free to ask any further questions or seek explanations for related topics!---**End of Content**

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Depreciation is charged on the assets indicating the decrease in the value of the asset.…

Business

Accounting

Vaughn Company purchased a machine on January 1, 2019, for $59000 with an estimated salvage value of $25000 and an estimated useful life of 8 years. On January 1, 2021, Vaughn decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $25000. Using the straight-line method, the new annual depreciation will be O $2550. O $2833. O $3400. O $4917.

Vaughn Company purchased a machine on January 1, 2019, for $59000 with an estimated salvage value of $25000 and an estimated useful life of 8 years. On January 1, 2021, Vaughn decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $25000. Using the straight-line method, the new annual depreciation will be O $2550. O $2833. O $3400. O $4917.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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.

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