Jack's Copy Shop bought equipment for $240,000 on January 1, 2021.Jack estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used.On January 1, 2022, Jack decides that the business will use the equipment for a total of 5 years.What is the revised depreciation expense for 2022?
A)$80,000
B)$32,000
C)$40,000
D)$60,000

Question

Quizplus · Accepted Answer

The original depreciation was $80,000 per year ($240,000/3 years). After one year, $80,000 has been depreciated, leaving a book value of $160,000. With 4 years remaining (2022-2025), the revised annual depreciation is $40,000 ($160,000/4 years).

Jack's Copy Shop Bought Equipment for $240,000 on January 1