At the beginning of 2010, the accounting records for Bright Tans showed the following balances for its
Question:
At the beginning of 2010, the accounting records for Bright Tans showed the following balances for its deluxe high-pressure tanning bed, purchased at the beginning of 2007:
Deluxe high-pressure tanning bed .......$65,000
Accumulated depreciation .......... 30,000
During 2010, the following cash costs were incurred for repairs and maintenance on the tanning bed:
Routine maintenance and repairs ............... $ 350
Major overhaul of the tanning bed that improved efficiency.... 18,000
The company uses straight-line depreciation and it now estimates the tanning bed will last for a total of 10 years with $150 estimated salvage value. The company’s fiscal year ends on December 31.
1. How much did the company record for depreciation on the tanning bed at the end of 2009?
2. After the overhaul, at the beginning of 2010, what is the remaining estimated life?
3. What is the amount of depreciation expense the company will record for 2010?
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Step by Step Answer:
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers