Ron's Quik Shop bought machinery for $75,000 on January 1, 2017. Ron estimated the useful life to be 5 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2018, Ron decides that the business will use the machinery for a total of 6 years. What is the revised depreciation expense for 2018?

Question

Quizplus · Accepted Answer

The revised depreciation expense for 2018 is $12,000. This is because the useful life of the machinery has been revised from 5 years to 6 years, which means that the annual depreciation expense will be lower. The original depreciation expense was $15,000 ($75,000 / 5 years), but the revised depreciation expense is $12,000 ($75,000 / 6 years).

Ron's Quik Shop Bought Machinery for $75,000 on January 1