WZ acquired some machinery on January 2,20x1.WZ used straight-line depreciation with an estimated life of 15 years with no residual value.On January 1,20x6,WZ estimated that the remaining life of this machinery was 6 years with no residual value.How should this change be accounted for by WZ?

Question

Quizplus · Accepted Answer

The change in estimated remaining life should be accounted for by revising future depreciation per year. As there is no residual value, the book value on January 1, 20x6 would be the original cost of the machinery less accumulated depreciation for the first 5 years. Dividing this value by the remaining 6 years would give the revised annual depreciation amount. Therefore, choice A is the correct answer.

WZ Acquired Some Machinery on January 2,20x1