Answer:
The company will recognize 4,500 for depreciation expense related to this machine.
Explanation:
First step, calculate the book value at the beginning of the seventh year
purchase - salvage value = amount subject to depreciation
125,000 - 15,000 = 110,000 depreciable amount
depreciable amount / useful life = depreciation per year
110,000 / 10 = 11,000 per year
It was depreciate for 6 years
11,000 * 6 = 66,000 accumulated depreciation
book value = purchase - accumulated depreciation
125,000- 66,000 = 59,000
Now, this will be depreciate over 12 years with a salvage value of 5,000
purchase - salvage value = amount subject to depreciation
59,000 - 5,000 = 54,000
depreciable amount / useful life = depreciation per year
54,000/12 = 4,500 depreciation per year
The company will recognize 4,500 for depreciation expense related to this machine.
