Wolverine Corporation purchased a machine for $132,000 on January 1, 2008, and d

Question

Wolverine Corporation purchased a machine for $132,000 on January 1, 2008, and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 1,2011, Wolverine determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of $12,000. A change in estimate was made in 2011 to reflect these additional data. What amount should Wolverine record as the balance of the accumulated depreciation account for this machine at December 31, 2011.
a. $73,000
b. $77,000
c. $61,250
d. $63,600

Explanation / Answer

depreciation =cost price-salvage value/estimated life
depreciation from i jan 2008 to 31 dec 2010=132000/8=16500
for 3 years=16500*3=49500


written down value on 1 jan 2011=132000-49500=82500
depreciation for 2011=89500-12000/3=23500
total accumulated depreciation=49500+23500=$73000

estimated life of 6 six years is from aquisation so from 1 jan 2011 3 years will be taken to compute depreciation

a. $73,000
b. $77,000
c. $61,250
d. $63,600

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