Ask Question
20 September, 13:28

Swift Company purchased a machine on January 1, 2010, for $500,000. At the date of acquisition, the machine had an estimated useful life of six years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2013, Swift determined, as a result of additional information, that the machine had an estimated useful life of eight years from the date of acquisition with no salvage. An accounting change was made in 2013 to reflect this additional information. What is the amount of depreciation expense on this machine that should be charged in Swift's income statement for the year ended December 31, 2013

+5
Answers (1)
  1. 20 September, 14:07
    0
    Swift Company should charge depreciation expense of $55,556 to income statement for the year ended December 31, 2013.

    Explanation:

    Under straight-line method, depreciation expense is (cost - residual value) / No of years = ($500,000 - 0) / 6 years = $83,333 yearly depreciation expense.

    Accumulated depreciation as at end of 20212 = $83,333 x 2 = $166,667

    Net book value (NBV) becomes $500,000 - $166,667 = $333,333

    New depreciation is ($333,333 - $0) / 6 years = $55,556 yearly depreciation expenses from 2013 onward.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Swift Company purchased a machine on January 1, 2010, for $500,000. At the date of acquisition, the machine had an estimated useful life of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers