A company purchased a machine on January 2, 2018 at a cost of $80,000. At the time of purchase, the company estimated that the machine would have a useful life of 10 years with a salvage value of $8,000 expected at the end of that time. The company elected to depreciate the machine on a straight-line basis over its 10-year estimated useful life; a full year's depreciation was taken in the year of acquisition (2018).
Before recording depreciation for the year ending December 31, 2023, the company revised its estimates of the remaining useful life and expected salvage value. Management felt that the machine could be used economically for only 2 years beyond the current year (ending December 31, 2023) because of unusually high production during the first 6 years (2018–2023). The estimated salvage value was also reduced from $8,000 to $2,000. Accordingly, management revised its depreciation schedule effective for the year ending December 31, 2023 to reflect its new estimates (of the remaining useful life and salvage value).

Depreciation expense (based on the revised estimates) to be charged against income in the year ending December 31, 2023 will be:

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To calculate the depreciation expense for the year ending December 31 2023 based on the revise... View the full answer