Williamson Corporation purchased a depreciable asset for $300,000 on January 1, 2008.The estimated residual value is $30,000, and the estimated useful life is 9 years.The straight-line method is used for depreciation.In 2011, Williamson changed its estimates to a total useful life of 5 years with a salvage value of $50,000.What is 2011 depreciation expense?

Question

Quizplus · Accepted Answer

Calculate the annual depreciation expense under the original estimates:

($300,000 - $30,000) / 9 = $30,000 per year

Calculate the revised annual depreciation expense:

($300,000 - $50,000) / 5 = $50,000 per year

Since the change in estimates occurred in 2011, the depreciation expense for that year will be based on the revised estimates:

$50,000 * (11/12) = $45,833 (depreciation expense for 2011)

However, since the question only provides answer choices in increments of $10,000, the closest answer is C, $80,000.

Williamson Corporation Purchased a Depreciable Asset for $300,000 on January