A plant asset was purchased for $19,000 on 1/1/x0 with a residual value of $2,000 and useful life of five years.In 20x3, the total useful life is re-estimated to be seven years and the estimated salvage value is assumed to be zero.Sum-of-the-year's-digits depreciation is used.What is depreciation expense in 20x3?

Question

Quizplus · Accepted Answer

The correct answer is A.The sum-of-the-year's-digits depreciation expense for 20x3 is $2,160. This is calculated as follows:Depreciation expense = (Cost - Residual value) x (Remaining useful life / Sum of the year's digits)= ($19,000 - $2,000) x (5 / 15)= $17,000 x (1/3)= $2,160

A Plant Asset Was Purchased for $19,000 on 1/1/x0 with a Residual