SportsWorld uses straight-line depreciation for a piece of equipment that cost $12,000,had a salvage value of $2,000,and a five-year service life.At the end of the first year,an impairment loss of $2,000 was recognized on the asset.Calculate the amount of depreciation expense for each of the remaining years of the asset's useful life.

Question

Quizplus · Accepted Answer

The original annual depreciation is ($12,000 - $2,000) / 5 = $2,000. After the impairment loss, the new book value is $8,000 ($12,000 - $2,000 - $2,000 impairment). The remaining depreciation is ($8,000 - $2,000 salvage value) / 4 years = $1,500 per year.

SportsWorld Uses Straight-Line Depreciation for a Piece of Equipment That