When originally purchased,a vehicle had an estimated useful life of 8 years.The vehicle cost $25,000 and its estimated residual value is $3,000.After 3 years of straight-line depreciation,the asset's total estimated useful life was revised from 8 years to 5 years and there was no change in the estimated residual value.The depreciation expense in year 4 is
A)$6,875.
B)$4,400.
C)$4,125
D)$1,650.

Question

Quizplus · Accepted Answer

The depreciation expense for the first three years is $22,000 / 8 = $2,750 per year. After the revision, the remaining depreciable amount is $22,000 - $2,750 * 3 = $14,000. The new depreciation expense is $14,000 / 5 = $2,800 per year. The depreciation expense in year 4 is $2,800.

When Originally Purchased,a Vehicle Had an Estimated Useful Life of 8