Exhibit 23-2 On January 1, 2010, Michelle, Inc.purchased a machine for $48, 000.Eight-year, straight-line depreciation with no salvage value was used through December 31, 2013.On January 1, 2014, it was estimated that the total useful life of the machine from acquisition date was ten years.
-
Refer to Exhibit 23-2.Accordingly, the appropriate accounting change was made in 2014.How much depreciation expense for this machine should Michelle record for the year ended December 31, 2014?
A)$4, 800
B)$4, 000
C)$2, 400
D)$ 0

Question

Quizplus · Accepted Answer

The original depreciation per year was $48,000 / 8 = $6,000. After 4 years (2010-2013), total depreciation would be $6,000 * 4 = $24,000. The remaining book value at the start of 2014 is $48,000 - $24,000 = $24,000. With the revised useful life to 10 years total, and 4 years already passed, there are 6 years remaining. Thus, the new annual depreciation is $24,000 / 6 = $4,000.

Exhibit 23-2 on January 1, 2010, Michelle, Inc