Ron's Quik Shop bought equipment for $140,000 on January 1, 2016. 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, 2017, Ron decides that the business will use the equipment for a total of 6 years. What is the revised depreciation expense for 2017?

Question

Quizplus · Accepted Answer

The revised depreciation expense for 2017 is $22,400. This is calculated by dividing the remaining cost of the equipment ($140,000 - $28,000 = $112,000) by the remaining useful life (6 years - 1 year = 5 years).

Ron's Quik Shop Bought Equipment for $140,000 on January 1