A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is
A) 15 years.
B) 12 years.
C) 5 years.
D) 7 years.

Question

Quizplus · Accepted Answer

The total depreciation over the asset's life is $60,000 ($75,000 - $15,000). With $5,000 annual depreciation, the asset's useful life is 12 years ($60,000 / $5,000). With $25,000 accumulated depreciation, 5 years have passed ($25,000 / $5,000), leaving 7 years remaining.

A Plant Asset Was Purchased on January 1 for $75,000