Runyan Company has a molding machine with a historical cost of $150,000 and accumulated depreciation of $110,000.

Question:

Runyan Company has a molding machine with a historical cost of $150,000 and accumulated depreciation of $110,000. On January 1, the company performed a major motor overhaul costing $24,000. Runyan expects the machine will last seven more years and have a of $8,000. Compute depreciation expense for the current year using the straight-line method.

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...