Don's Copy Shop bought equipment for $450000 on January 1 2016. Don estimated the useful life to be 3 years with no salvage value and the straight-line method of depreciation will be used. On January 1 2017 Don decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2017?

Question

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The equipment's book value at the beginning of 2017 is $300,000 ($450,000 - $150,000). With a revised useful life of 5 years, 4 years remain. The revised annual depreciation is $75,000 ($300,000 / 4).

Don's Copy Shop Bought Equipment for $450000 on January 1