The annual depreciation worked out

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On January 1, 20X1, Robust Inc. purchased heavy-duty equipment for $400,000. On the date of installation, it was estimated that the machine has a useful life of 10 years and a residual value of $40,000.

Accordingly the annual depreciation worked out to $36,000 = [($400,000 - $40,000) / 10].

On January 1, 20X5, after four years of using the equipment, the company decided to review the useful life of the equipment and its residual value. Technical experts were consulted. According to them, the remaining useful life of the equipment at January 1, 20X5, was seven years and its residual value was $46,000.

Required
Compute the revised annual depreciation for the year 20X5 and future years.

Reference no: EM131097242

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