Bottling Company purchased equipment that cost $55,000. The company estimates that the equipment will last for four years and will have a salvage value of $5,000. The company uses the straight-line method of depreciation and has a June 30 fiscal year end. Analyze each of the following independent scenarios:

a. Before depreciation expense is recorded for the fiscal year ended June 30, 2011, Bottling decides that the equipment will last until June 30, 2013, but that it will be worth only $500 at that time.

b. Before depreciation expense is recorded for the fiscal year ended June 30, 2011, Bottling decides that the equipment will last only until June 30, 2012. The company anticipates the value of the equipment at that time will still be $5,000.

c. Before depreciation expense is recorded for the fiscal year ended June 30, 2011, Bottling decides that the equipment will last until June 30, 2013, but that it will be worth only $50 at that time.

d. Before depreciation expense is recorded for the fiscal year ended June 30, 2011, Bottling is told by the manufacturer that with an upgrade, the equipment’s estimated life will be extended to June 30, 2016; however, the estimated salvage value at that time would be zero. The company spends $10,000 on upgrades.

Requirement

Calculate the amount of depreciation expense related to the equipment Bottling will report on its income statement for the fiscal year ended June 30, 2011, for each scenario.