Helmut, Inc. purchased a truck on July 1, 2019, for $37,800. At that time, the truck's useful life was an estimated five years with no salvage value. Before the entry to record 2021 depreciation was made, the truck's estimated useful life was changed to four years with a $1,400 salvage value.
Using straight-line depreciation, what is the 2021 depreciation expense?

Question

Quizplus · Accepted Answer

Book value at time of revision: $37,800 - (1.5 years x $7,560*) = $26,460
$26,460 - $1,400 salvage value = $25,060 revised remaining depreciation
$25,060/2.5 years revised remaining useful life = $10,024
*$37,800 / 5 = $7,560 = Annual straight-line depreciation