Danny's Delivery Service purchased a delivery van for $30,000.The van had an estimated useful life of six years and an estimated residual value of $6,000.After four years of use,the total estimated useful life is revised to seven years.Assuming straight-line depreciation,depreciation expense in year 5 would be
A) $2,667.
B) $4,667.
C) $2,000.
D) $1,143.

Question

Quizplus · Accepted Answer

The correct answer is A because the depreciation expense for year 5 would be $2,667. This is calculated by taking the cost of the van ($30,000) minus the residual value ($6,000) and dividing by the revised estimated useful life (7 years). This gives us an annual depreciation expense of $3,429. To find the depreciation expense for year 5, we multiply the annual depreciation expense by the number of years the van has been used (5 years). This gives us a depreciation expense for year 5 of $2,667.

Danny's Delivery Service Purchased a Delivery Van for $30,000