Burke Copy Center purchased a machine on January 1, 2009, for $180,000 and estimated its useful life

Question:

Burke Copy Center purchased a machine on January 1, 2009, for $180,000 and estimated its useful life and salvage value at ten years and $30,000, respectively. On January 1, 2014, the company added three years to the original useful-life estimate.

REQUIRED:

a. Compute the book value of the machine as of January 1, 2014, assuming that Burke recognizes the depreciation using straight-line.

b. Prepare the journal entry to record depreciation entered by the company on December 31, 2014, assuming that Burke uses straight-line.

Salvage Value
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...