An asset was purchased for ¥150,000.It had an estimated residual value of ¥30,000 and an estimated useful life of 10 years.After 5 years of use, the estimated residual value is revised to ¥24,000 but the estimated useful life is unchanged.Assuming straight-line depreciation, depreciation expense in year 6 would be

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Quizplus · Accepted Answer

Straight-line depreciation is calculated by taking the cost of the asset, subtracting its residual value, and dividing that amount by the estimated useful life. In this case, the depreciation expense per year would be (¥150,000 - ¥30,000) / 10 years = ¥12,000. After 5 years, the accumulated depreciation would be ¥60,000 (5 years x ¥12,000 per year). With the revised residual value of ¥24,000, the remaining depreciable amount would be ¥126,000 (¥150,000 - ¥24,000). Dividing that amount by the remaining useful life of 5 years gives a depreciation expense of ¥25,200 per year. However, since we only need to calculate the expense for year 6, we would take the remaining depreciable amount of ¥63,000 (5 years x ¥12,600 per year) and divide it by the remaining useful life of 5 years, giving an answer of ¥12,600 (Option B).

An Asset Was Purchased for ¥150,000