Cheetah Company purchased machinery on January 1, 2008, for $60,000. The machinery is estimated to have a

Question:

Cheetah Company purchased machinery on January 1, 2008, for $60,000. The machinery is estimated to have a salvage value of $6,000 after a useful life of 8 years.

(a) Compute 2008 depreciation expense using the straight-line method.

(b) Compute 2008 depreciation expense using the straight-line method assuming the machinery was purchased on September 1, 2008.

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...