Ron's Quik Shop bought machinery for $25,000 on January 1, 2010.Ron estimated the useful life to be 5 years with no residual value, and the straight-line method of depreciation will be used.On January 1, 2011, Ron decides that the business will use the machinery for a total of 6 years.What is the revised depreciation expense for 2011?

Question

Quizplus · Accepted Answer

The machinery's book value at the beginning of 2011 is $20,000 ($25,000 - $5,000 depreciation for 2010). With a revised useful life of 6 years, 5 years remain. The revised annual depreciation is $20,000 / 5 = $4,000.

Ron's Quik Shop Bought Machinery for $25,000 on January 1