Raas, Inc. purchased a truck on January 1, 2019, for $144,000. At that time, the truck's useful life was an estimated four years with no salvage value. Before the entry to record 2022 depreciation was made, the truck's estimated useful life was changed to six years with a $2,700 salvage value.
Using straight-line deprecation, what is the 2022 depreciation expense?

Question

Quizplus · Accepted Answer

Book value at time of revision: $144,000 - (3 years x $36,000*) = $36,000
$36,000 - $2,700 salvage value = $33,300 revised remaining depreciation
$33,300 / 3** years revised remaining useful life = $11,100
*$144,000 / 4 = $36,000 = Annual straight-line depreciation
**6 years revised useful life - 3 years of useful life utilized = 3 years remaining useful life

Raas, Inc Purchased a Truck on January 1, 2019, for $144,000