The Fall River Corporation bought a plant asset on January 1, 2006, at a cost of $45,000. Estimated residual value is $5,000 and the estimated useful life is 8 years. The company uses straight- line depreciation. On January 1, 2009, Fall River's management revises the total estimated life to be 10 years, with estimated residual value of $2,000. The balance in Accumulated Depreciation on December 31, 2009, is:

Question

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The original annual depreciation was ($45,000 - $5,000) / 8 = $5,000. By the end of 2008, accumulated depreciation was 3 years x $5,000 = $15,000. In 2009, the revised depreciation is calculated as ($45,000 - $2,000 - $15,000) / (10 - 3) = $4,000 per year. By the end of 2009, accumulated depreciation is $15,000 + $4,000 = $19,000.

The Fall River Corporation Bought a Plant Asset on January