1.
Fellingham Corporation purchased equipment on January 1. 2011. for $200,000. The company
estimated the equipment would have a useful life of 10 years with a $20.800 residual value.
Fellingham uses the straight-line depreciation method. Early in 2013. Fellingham reassessed the
equipment's condition and determined that its total useful life would be only six years in total
and that it would have no salvage value. How much would Fellingham report as depreciation on
this equipment for 2013? $27360. $38,040. $35.840. $41,040.
Solution
1-Jan-11 Equipment Cost 200000 Less: Salvage Value 20800 Depreciable Value 179200 Useful
Life In years 10 Depreciation every year (Depreciable Value/ Useful Life) 17920 1-Jan-13
Written Down Value of the Equipment Equipment Cost 200000 Less: Depreciation for year:
2011 17920 2012 17920 Written Down Value 164160 Revised Useful life in Years 6
Depreciation every year (Written Down Value/ Revised Useful Life) 27360