Able Towing Company purchased a tow truck for $75,000 on January 1, 2010.It was originally depreciated on a straight-line basis over 10 years with an assumed residual value of $15,000.On December 31, 2012, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2012) and the residual value to $2,500.What was the depreciation expense for 2012?

Question

Quizplus · Accepted Answer

The depreciation expense for 2012 is $15,125. This is calculated as follows:Depreciation expense = (Cost - Residual value) / Estimated life= ($75,000 - $2,500) / 4= $15,125

Able Towing Company Purchased a Tow Truck for $75,000 on January