Answer:
The amount of depreciation on the year 5 income statement would be $4000
Explanation:
The following data were provided;
Cost of the asset = $100,000
Salvage value = $20,000
Estimated useful life= 8 years
Depreciation method = straight-line method.
Solve;
Annual depreciation expense = (cost of the asset - salvage value) ÷ useful life
= ($100,000 - $20,000) ÷ 8 = $10,000
Therefore, depreciation accumulated for the first four years = $10,000 × 4 = $40,000
At the end of year 4,
The book value of the asset = cost of the asset - accumulated depreciation
= $100,000 - $40,000 = $60,000
The revised estimated life of the asset = 14 years.
The remaining years left starting from the year 5,
= 14- 4 = 10 years
Revised annual depreciation expense
= ($60,000 book value - salvage value) ÷ useful life
= ($60,000 - $20,000) ÷ 10
= $4,000
Therefore, the amount of depreciation on the year 5 income statement would be $4000
Answer:
The amount of accumulated depreciation on the Year 6 balance sheet would be $48,000.
Explanation:
You’ll need to first Calculate first the annual depreciation for 4 years with use of the straight line method:
The Annual 4 years depreciation = useful life/(cost - salvage value) = (100,000 - 20,000) / 8 = 10,000
So, by the above calculation, the accumulated depreciation for 4 years will be 10,000 x 4 = 40,000
The Book value prior to the change of useful life = Cost - Accumulated depreciation = 100,000 - 40,000 = 60,000
The revised estimated life of the asset = 14 years.
The remaining years left starting from the year 5,
= 14- 4 = 10 years
Revised annual depreciation expense
= ($60,000 book value - salvage value) ÷ useful life
= ($60,000 - $20,000) ÷ 10
= $4,000
So, the 5th year accumulated depreciation will be = $4,000
