Consider the following data for Kathleen's Tropical Resorts, Inc. Cost of machine . . . . .
Question:
Consider the following data for Kathleen's Tropical Resorts, Inc.
Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units). . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 1,600,000
Units produced during the fi rst year . . . . . . . . . . . . . . . . . . . . . . . 180,000
Assume Kathleen’s computed depreciation expense of $120,000 per year. After three years, Kathleen’s determined that the machine would last eight more years (for a total of 11 years). Compute depreciation expense for the fourth year.
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...
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Book value after three ...View the full answer
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
