Tweed Feed & Seed Purchased a New Machine on January

Essay

Tweed Feed & Seed purchased a new machine on January 1, 20X1: $$\begin{array} { | l | r | } \hline \text { Cost when acquired } & \$ 26,000 \\\hline \text { Estimated residual value } & 2,000 \\\hline \text { Estimated useful life } & 10 \text { years } \\\hline\end{array}$$ Accumulated depreciation at the end of year 5 (assume straight-line depreciation) $12,000 It is now the beginning of year 6 and the management re-evaluated the estimates related to the machine. Compute the depreciation expense for year 6 under each of the following independent cases: $$\begin{array} { | l | l | l | } \hline \text { Case } & \text { Event } & \text { Depreciation Expense } \\\hline \text { A } & \text { The estimated total useful life is changed to 15 years } & \\\hline \text { B } & \begin{array} { l } \text { The residual value is changed to } \$ 1,000 ; \text { useful life } \\\text { unchanged }\end{array} & \\\hline \text { C } & \begin{array} { l } \text { The estimated total useful life is changed to 7 years and } \\\text { the residual value is changed to } \$ 3,000 .\end{array} & \\\hline\end{array}$$