When originally purchased, a vehicle had cost $23,000, with an estimated residual value of $1,500, and an estimated useful life of 8 years. After 4 years of straight-linedepreciation, the estimated useful life was revised from 8 to 6 years, but with zero residual value. The depreciation expense in year 5 should be:

Question

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The initial annual depreciation was ($23,000 - $1,500) / 8 = $2,687.50. After 4 years, accumulated depreciation is $10,750. The book value is $23,000 - $10,750 = $12,250. With a revised useful life of 6 years and zero residual value, the remaining life is 2 years. The new annual depreciation is $12,250 / 2 = $6,125.00.

When Originally Purchased, a Vehicle Had Cost $23,000, with an Estimated