Eastern Company purchased a machine on January 1, 2019, for $180,000. At that time, the machine's useful life was an estimated six years with a zero salvage value. Just before depreciation was recorded for 2023, the machine's estimated useful life was extended by six years with a $12,000 salvage value.
Using straight-line depreciation, what is the 2023 depreciation expense?

Question

Quizplus · Accepted Answer

Book value at time of revision: $180,000 - (4 years x $30,000*) = $60,000
$60,000 - $12,000 salvage value = $48,000 revised remaining depreciation
$48,000 / 8** years revised remaining useful life = $6,000
*$180,000 / 6 = $30,000 = Annual straight-line depreciation
**(6 - 4) years remaining pre-revision useful life + 6 years of extended useful life = 8 years remaining useful life

Eastern Company Purchased a Machine on January 1, 2019, for $180,000