Ron's Quik Shop bought equipment for $140,000 on January 1, 2021.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, 2022, Ron decides that the business will use the equipment for a total of 6 years.What is the revised depreciation expense for 2022?
A)$22,400
B)$11,200
C)$18,666 d $28,000

Question

Quizplus · Accepted Answer

The original annual depreciation was $28,000 ($140,000 / 5 years). After one year, the book value is $112,000 ($140,000 - $28,000). With the revised useful life of 6 years, 5 years remain. The new annual depreciation is $22,400 ($112,000 / 5 years).

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