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    sasham's Avatar
    sasham Posts: 24, Reputation: 1
    New Member
    		  
    #1

    Apr 29, 2009, 06:02 AM
    depreciation expense
    On January 1, 2004, Carnival Shipping bought a machine for $1,500,000. At that time,
    this machine had an estimated useful life of six years, with no salvage value. As a result of
    additional information, Carnival determined on January 1, 2007, that the machine had an
    estimated useful life of eight years from the date it was acquired, with no salvage value.
    Accordingly, the appropriate accounting change was made in 2007. How much depreciation
    expense for this machine should Carnival record for the year ended December 31, 2007,
    assuming Carnival uses the straight-line method of depreciation?
    I'm thinking next:
    1500000/8=187500
    Am I right? Because I also see next
    1500000/6=250000
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Apr 29, 2009, 02:27 PM

    On Jan 1, 2007 you will use the reamining book value of the asset divided by 5 years because you have already recorded Depreciation for 3 years out of the 8 years of useful life.

    Your Remaining book value should be $750,000 / 5yrs = $150,000 Depreciation Expense per year.
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