Machinery that cost $90,000 was estimated originally to have a 20-year life and a $10,000 residual value. It has already been depreciated for eight years. In year 9, assume that the asset’s total life is now expected to be 30 years with a residual value of only $2,000. Depreciation has been recorded on the asset for the first eight years at the rate of 1/20 × ($90,000 – $10,000), or $4,000 each year, by the straight-line method.
Instructions:
A. Provide revised calculations of the charges for depreciation in the current and subsequent periods, and the related journal entry to be recorded each year assuming the straight-line method is still appropriate.