Portland Products purchased a machine on January 1, 2008, for 60,000 and estimated its useful life and

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Portland Products purchased a machine on January 1, 2008, for 60,000 and estimated its useful life and salvage value at five years and $12,000, respectively. On January 1, 2011, the company added three years to the original useful-life estimate.

a. Compute the book value of the machine as of January 1, 2011, assuming that Portland uses the straight-line method of depreciation.

b. Prepare the journal entry entered by the company to record depreciation on December 31, 2011.


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...
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