This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Under the straight-line method, depreciation expense for years four through seven is calculated according to the following equation. Revising Straight-Line Deprciation Assume that the company purchased the truck at the beginning of an annual accounting period. The previous table shows how depreciation expense was calculated during the truck's first three years of use. The truck's net book value of $42,000 at the end of year three is reduced by the new, $14,000 estimate of salvage value to produce a revised depreciable cost of $28,000. The revised depreciable cost is divided by the four years now estimated to remain in the truck's useful life, yielding annual depreciation expense of $7,000. Similar revisions are made for each of the other depreciation methods. The asset's net book value when the revision is made along with new estimates of salvage value and useful lifemeasured in...
View Full Document
- Fall '10