Copycat Copy Shop bought equipment for $ 16,000 on January 1, 2021. Copycat estimated the useful life to be 4 years with no residual value, and the straight-line method of depreciation will be used. On December 31, 2022, prior to recording depreciation for that year, Copycat decides that the business will use the equipment for a total of 5 years. What is the depreciation expense for 2022?

Question

Quizplus · Accepted Answer

The original annual depreciation was $4,000 ($16,000 / 4 years). After 2 years, $8,000 has been depreciated. The remaining book value is $8,000, and with 3 years remaining (2022, 2023, 2024), the new annual depreciation is $2,666.67. However, since the question asks for the depreciation expense for 2022, the correct calculation is $8,000 / 3 = $2,666.67, which rounds to $3,000 for simplicity.

Copycat Copy Shop Bought Equipment for $ 16,000 on January