CHANGE IN ACCOUNTING ESTIMATE Able Corp. acquired a machine January 1, 20x12 for $800,000. The machine...

 

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CHANGE IN ACCOUNTING ESTIMATE Able Corp. acquired a machine January 1, 20x12 for $800,000. The machine had an eight-year useful life with an estimated residual value of $80,000. The entity uses the diminishing balance method of depreciation (assume a depreciation rate of 12.5%). After 3 years, Able re-assessed the useful life and residual value. Based on this review, it was determined the useful life would be revised to 6 years and the residual value revised to 100,000. Able also decided to change to the straight-line method of depreciation. What would be the depreciation expense in year 4? CHANGE IN ACCOUNTING ESTIMATE Able Corp. acquired a machine January 1, 20x12 for $800,000. The machine had an eight-year useful life with an estimated residual value of $80,000. The entity uses the diminishing balance method of depreciation (assume a depreciation rate of 12.5%). After 3 years, Able re-assessed the useful life and residual value. Based on this review, it was determined the useful life would be revised to 6 years and the residual value revised to 100,000. Able also decided to change to the straight-line method of depreciation. What would be the depreciation expense in year 4?

Answer rating: 100% (QA)

Answer To calculate the depreciation expense for year 4 we need to determine the book value of the a... View the full answer