Duval Industries purchases $110,000 of machinery on January 1, 2020. The machinery is expected to have a 5 year useful life and a residual value of $10,000. On January 1, 2023, management determines that the equipment will last for an additional 2 years and the new residual value is $6,000. Duval uses straight-line depreciation and has a calendar year end.
Instructions
Calculate the depreciation expense related to this piece of machinery and determine the carrying value of the machinery on December 31, 2023.

Question

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The Answer of Duval Industries purchases $110,000 of machinery on January 1, 2020. The machinery is expected to have a 5 year useful life and a residual value of $10,000. On January 1, 2023, management determines that the equipment will last for an additional 2 years and the new residual value is $6,000. Duval uses straight-line depreciation and has a calendar year end.
Instructions
Calculate the depreciation expense related to this piece of machinery and determine the carrying value of the machinery on December 31, 2023.

Duval Industries Purchases $110,000 of Machinery on January 1, 2020