Estimating the residual value


Response to the following problem:

Singh Enterprises has an accounting year to 31 December and uses the straight-line method of depreciation. On 1 January 2004 the business bought a machine for £10,000. The machine had an expected useful life of four years and an estimated residual value of £2,000. On 1 January 2005 the business bought another machine for £15,000.

This machine had an expected useful life of five years and an estimated residual value of £2,500. On 31 December 2006 the business sold the first machine bought for £3,000.

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Financial Accounting: Estimating the residual value
Reference No:- TGS02124819

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