waterway company purchased a computer system for $74,600 on january 1, 2019. it was depreciated based on a 7-year life and an $18,600 salvage value. on january 1, 2021, waterway revised these estimates to a total useful life of 4 years and a salvage value of $9,100. waterway uses straight-line depreciation.

The organization can calculate the revised depreciation by way of figuring out the last depreciable fee with the formulation of deducting the accrued depreciation and salvage price on the revision date from the unique value of the constant asset.

Depreciation fee: if the charge of cashflows (advantages) from the asset has improved or decreased, the entity might also regulate the depreciation price to be in shape. Residual cost of asset: the cost entity is looking forward to getting better on the quit of useful existence by means of scrapping or recycling the asset can be exclusive than anticipated.

If there may be a big alternate in an asset's predicted salvage cost and/or the asset's estimated beneficial life, the exchange in the estimate will result in a new quantity of depreciation price within the cutting-edge accounting yr and in the final years of the asset's beneficial life.

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