Santayana Company purchased a machine on January 1 2015 for $60000 with an estimated salvage value of $15000 and an estimated useful life of 8 years. On January 1 2017 Santayana decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $15000. Using the straight-line method the new annual depreciation will be

Question

Quizplus · Accepted Answer

The original annual depreciation was ($60,000 - $15,000) / 8 = $5,625. After 2 years, $11,250 has been depreciated, leaving a book value of $48,750. With 10 years remaining (12 total - 2 already passed), the new annual depreciation is ($48,750 - $15,000) / 10 = $3,375.

Santayana Company Purchased a Machine on January 1 2015 for $60000