Waterway industries purchased a depreciable asset for $837300 on january 1, 2018. the estimated salvage value is $84000, and the estimated total useful life is 9 years. the straight-line method is used for depreciation. in 2021, waterway changed its estimates to a total useful life of 5 years with a salvage value of $142000. what is 2021 depreciation expense

$222,100

Explanation:

Cost = $837,300

Residual value = $84,000  

Useful life = 9 years  

Now,  

Annual straight line depreciation =  

Annual straight line depreciation =  

Annual straight line depreciation =  

Annual straight line depreciation = $83,700

Accumulated depreciation for three years i.e., 2018, 2019 and 2020 would be:

Accumulated depreciation = 3 × $83,700

Accumulated depreciation = $251,100

Book value (at the end of year 2020) = Cost - Accumulated depreciation  

Book value (at the end of year 2020) = $837,300 - $251,100

Book value (at the end of year 2020) = $586,200

Revised useful life = 5 years

No. years asset has been used = 3 years

Remaining useful life = 2 years

Revised salvage value = $142,000

Therefore, depreciation expense for the remaining three year would be:

Revised depreciation expense =  

Revised depreciation expense =  

Revised depreciation expense =

Revised depreciation expense = $222,100

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