On January 1, 20x1, MBC purchased a pattern-making machine for $400,000 cash.The machine had an estimated useful life of 25 years and a residual value of $10,000.At the beginning of 20x6, the machine was given a major overhaul, which cost $28,000.The overhaul cost was properly debited to the asset account.The overhaul did not change the estimated residual value but did change the total estimated life to 30 years.The accounting period ends December 31.MBC should recognize 20x6 depreciation of:

Question

Quizplus · Accepted Answer

The original cost of the machine is $400,000, and the overhaul cost added $28,000, making the new total cost $428,000. With the revised total estimated life of 30 years and a residual value of $10,000, the depreciation expense for 20x6 is calculated as ($428,000 - $10,000) / 30 = $13,933.33, rounded to the nearest hundred as $13,600.

On January 1, 20x1, MBC Purchased a Pattern-Making Machine for $400,000