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On July 1, 2019, Cullumber Company purchased new equipment for $85,000. Its estimated useful life was 5 years with a $12,000 salvage value.
On December 31, 2022, the company estimated that the equipment’s remaining useful life was 10 years, with a revised salvage value of $5,000.Compute the revised annual depreciation on December 31, 2022.

Revised annual depreciation $__________________

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Answer:

$3620

Explanation:

Assuming that the equipment depreciates with straight-line depreciation,

Initial Annual Depreciation = ($85,000 - $12,000)/5 = $14,600/year

NBV of equipment at December 30, 2022 = $85,000 - ($14,600*3) = $41,200

Revised Annual Depreciation = ($41,200 - $5,000)/10 = $3620/year

The standard yearly rate at which depreciation is charged to a fixed asset is called annual depreciation. The computation of the revised annual depreciation is attached below. Kindly go through it.

Unless fixed assets are replaced on a regular basis, annual depreciation causes the stated book values of fixed assets to gradually drop over time.

[tex]\text{Revised depreciation} = \text{[Book value - revised salvage value ]/revised remaining useful life}[/tex]

[tex]= [48500 -5000 ]/10 \\= 43500/10\\= $ 4350[/tex]

Therefore, the Revised Annual Depreciation (RAD) is $4,350.

For more information related to the annual depreciation, refer to the link:

https://brainly.com/question/15837533?referrer=searchResults

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