Augie Corporation purchased a truck at a cost of $60,000.It has an estimated useful life of five years and estimated residual value of $5,000.At the beginning of year three,Augie's managers concluded that the total useful life would be four years,rather than five.There was no change in the estimated residual value.What is the amount of depreciation that Augie should record for year 3 under the straight-line depreciation method?

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Quizplus · Accepted Answer

Years 1 & 2 annual depreciation expense ($11,000) = ($60,000 - $5,000) F1F1F1S1F1F1F10 5;Beginning of year 3 book value ($38,000) = $60,000 - ($11,000 F1F1F1S1F1F1F10 2);Year 3 depreciation expense ($16,500) = [Book value ($38,000) minus residual value ($5,000)] F1F1F1S1F1F1F10 2 remaining years of life.

Augie Corporation Purchased a Truck at a Cost of $60,000