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Can you help me to complete this question? I dont understand about scrap value at the purchase, did they like the additional purchase?
Senakuta Co purchase a machine with an estimated useful life of 5 years for 34000 on 30 September 20X5. Senakyta Co planned to scrap the machine at the end of its useful life and estimated that the scrap value at the purchase date was 4000. On 1 October 20X8, Sennakuta revised the scrap value to 2000 due to the decreased value of scrap metal
What is the depreciation charge for the year ended 30 September 20X9
A. 7000
B. 6800
C. 2800
D. 6400Originally the depreciation each year was (34,000 – 4,000) / 5 = 6,000
At 30 Sept X8 they will have had 3 years depreciation, and so the carrying value (net book value) was 34,000 – (3 x 6,000) = 16,000
The useful life remaining is 2 years (5 – 3).
The scrap value is revised to 2,000.So the depreciation now changes to (16,000 – 2,000) / 2 = 7,000 per year
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