Trans-State Movers purchased a truck on January 1, 2011, for $51,375. At the time of purchase, the truck was estimated to have a useful life of 6 years and a residual value of $3,375. In 2012, Trans-State determined that the truck had a total useful life of 10 years and the residual value is unchanged. If Trans-State uses the straight-line method of depreciation, what will be the 2012 depreciation expense for the truck?

Question

Quizplus · Accepted Answer

The original annual depreciation was ($51,375 - $3,375) / 6 = $8,000. After one year, the book value is $51,375 - $8,000 = $43,375. With the revised useful life of 10 years, 9 years remain. The new annual depreciation is ($43,375 - $3,375) / 9 = $4,444.44, rounded to $4,444.

Trans-State Movers Purchased a Truck on January 1, 2011, for $51,375