Apex Fitness Club uses straight-line depreciation for a machine costing $21,850,

Question

Apex Fitness Club uses straight-line depreciation for a machine costing $21,850, with an estimated four year life and a $2,500 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,050 salvage value.

Compute the machine’s book value at the end of its second year. (Do not round your intermediate calculations.)

Apex Fitness Club uses straight-line depreciation for a machine costing $21,850, with an estimated four year life and a $2,500 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,050 salvage value.

Explanation / Answer

COST OF MACHINE = $21850

LESS SALVAGE VALUE = ($2500)

DEPRICIABLE VALUE = $19350

USEFULL LIFE = 4YEARS

DEPRICIATION PER YEAR ($19350 / 4YEARS ) = $4837.50

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COST OF MACHINE IN YEAR 1 = $21850

LESS DEPRICIATION FOR YEAR 1 = ($4837.5)

WRITTEN DOWN VALUE END OF YEAR 1 = $17012.5

LESS DEPRICIATION FOR YEAR 2 = ($4837.5)

WRITTEN DOWN VALUE END OF YEAR 2 = $12175

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