Apex Fitness Club uses straight-line depreciation for a machine costing $24,100, with an estimated four year life and a $1,950 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $1,500 salvage value.

Apex Fitness Club uses straight-line depreciation for a machine costing $24,100, with an estimated four year life and a $1,950 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $1,500 salvage value.

Required:
1. Compute the machine’s book value at the end of its second year.






Explanation
1.
Two years' accumulated depreciation [($24,100 – $1,950) / 4 years] × 2 years = $11,075
 
2. Compute the amount of depreciation for each of the final three years given the revised estimates.
 
Explanation
2.
Revised annual depreciation = $11,525 / 3 years = $3,842

Thank you!