212. Santayana Company purchased a machine on January 1, 2016, for $60,000 with an estimated salvage value of $15,000 and an estimated useful life of 8 years. On January 1, 2018, Santayana decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $15,000. Using the straight-line method, the new annual depreciation will be

Question

Quizplus · Accepted Answer

The machine's book value at the beginning of 2018 is $45,000 ($60,000 - 2 years of depreciation at $5,625 per year). With a remaining life of 10 years (12 total - 2 used), the new annual depreciation is ($45,000 - $15,000) / 10 = $3,000.