An asset was purchased for $120,000 on january 1, year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000. at the beginning of the third year, it was determined that the remaining useful life of the asset was only four years with a residual value of $2,000. calculate the third-year depreciation expense using the revised amounts and straight-line method.

Depreciation Year 3 = $ 24000

Explanation:

Depreciation of year 1 using straight line method of depreciation

Dep Year 1 = Cost - Residual Value

                     Useful life

Dep Year 1 = 120,000-10,000

                       10years

Dep Year 1 = 11000

Dep Year 2 = 11000

In straight line method Depreciation amount remains constant in all years to follow

However in Year 3 residual amount and useful life were revised therefore depreciation amount also changed

Book Value at Year 3 = 120,000-22000

Book value Year 3 = 98000

Depreciation at Year 3 = book value- revised residua value

                                             revised useful life

Dep Year 3 = 98000-2000

                        4 years

Depreciation Year 3 = $24000

step 1: create a plan

step 2: inventory facility equipment/assets

step 3: create preventive maintenance procedures

step 4: create preventive maintenance schedules

step 5: train your maintenanceteam

step 6: analyze – adjust - improve

or

step 1 – pm procedure design: doing the effective things

step 2 – pm procedure scheduling: efficient use of people and resources

step 3 – pm lubrication engineering

step 4 – pm training: back on the chain gang

step 5 – pm program management plan

step 6 – communicate, communicate, communicate