Joy Machinery acquired a new machine on January 1, 2017 at a cost of $100,000, which was estimated to have a useful life of 10 years, and a salvage value of $40,000. Straight-line depreciation was used. On January 1, 2022, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after two more years, (that is, at the end of the eighth year of service), but would retain its original salvage value.
Under this revised estimate, calculate the depreciation expense for the seventh year of use.
A) $20,000
B) $12,000
C) $10,000
D) $12,500

Question

Quizplus · Accepted Answer

Annual depreciation = _($₁₀_{0,000 - $}₄_{0,000) / 10 = $}₆_,000 11ee7640_e1ca_c25e_90da_7b3269619a2e_TBCB1007_00 Revised depreciation for Years 7 and 8: $24,000 / 2 = $12,000 per year

Joy Machinery Acquired a New Machine on January 1, 2017