Question

2. Calculate the amount of depreciation to Ue Zamboni's revised useful life. Exercise 9-17 Revising depreciation rates-change in useful life and residual value LO4 CHECK FIGURE: Revised depreciation = $7,624 n April 3, 2017, David's Chocolates purchased a machine for $71,200. It was assumed that the machine would have a five-year life and a $15,200 trade-in value. Early in January 2020, it was determined that the achine would have a seven-year useful life and the trade-in value would be $8,000. David's Chocolates uses the straight-line method to the nearest month for calculating depreciation. Record depreciation at December 31, 2020, David's Chocolate's year-end. Round to the nearest whole dollar. uhsequent capital expenditure LO2,4

Please full calculation and explanation.

Answer 1

Answer = $ 7,624

Calculation:

A	Original cost	$                71,200
B	Original salvage value	$                15,200
C = A - B	Original depreciable base	$                56,000
D	Original expected life [years]	5
E = C/D	Annual 12 month depreciation	$                11,200
	Depreciation for:
	2017 (9 months)	$                   8,400
	2018'	$                11,200
	2019'	$                11,200
F	Total Accumulated Depreciation till estimates changed	$                30,800
G = A - F	Book Value at the time of change of estimate	$                40,400
H	New salvage value	$                   8,000
I = G - H	New depreciable base	$                32,400
J	New expected life [years]	7
K	Life already expired	2.75 [2 years + 9 months]
L = J - K	Remaining life	4.25 years
M = I/L	Revised depreciation expense from 2020 = ANSWER	$                   7,624 [$ 32400 / 4.25]