A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000, and had a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life

the amount of depreciation to be charged against the machine during each of the remaining years of its useful life is $2666.67

Explanation:

Straight Line Depreciation Charges the same amount for depreciation on the PPE item.

Depreciation Expense = (Cost - Salvage Value) / Useful Life

Year 1

Depreciation Expense = ($12,000 - $2,000) / 5

                                     = $ 2,000

Year 2

Depreciation Expense = $ 2,000

Year 3

Depreciation Expense = $ 2,000

Year 4

1. Adjust The Depreciable Amount

Depreciable Amount = Cost - Accumulated Depreciation to date - New Salvage Value

                                   = $12,000 - $ 2,000 - $ 2,000

                                   = $ 8,000

2. Adjust the Remaining Useful Life staring Beginning of Year 4

Remaining Useful Life before adjustments is 2

Addition to 6 years is 1

Total useful life Remaining is 3

Depreciation Expense = Revised Depreciable Amount / Remaining Useful Life

                                     = $ 8,000 /3

                                     = $2666.67

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.