Apex fitness club uses straight-line depreciation for a machine costing $23,860, with an estimated four-year life and a $2,400 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 $2,000 salvage value. required: 1. compute the machine’s book value at the end of its second year. 2. compute the amount of depreciation for each of the final three years given the revised estimates.

1. Book value at end of year 2 = $13,130

2. Depreciation from year 3 for last 3 years = $3,710 each year, that is $11,130 for three years.

Explanation:

As for the provided details, we have:

Cost of machinery = $23,860

Expected life = 4 years

Salvage value = $2,400

Straight line depreciation =

Under straight line method depreciation remains constant for life of asset.

Book value at end of year 2 = $23,860 - ($5,365 2) = $13,130

Thereafter in the beginning of year 3 the estimate is made to realize that the total remaining life expected is 3 years, with salvage value $2,000

Thus, depreciation from year 3 =

Therefore, depreciation from year 3 to year 5 = $3,710 each year.

Total depreciation of last 3 years = $3,710 3 = $11,130

answer/// product differentiation;