A truck that cost $12,000 was originally being depreciated over four years using the straight-line method with no salvage value.If after one year,it was decided that the truck would last an additional four years (or a total of five years),the second year's depreciation would be
A) $1,500
B) $2,250
C) $2,400
D) $3,000

Question

Quizplus · Accepted Answer

Using the straight-line method, the annual depreciation expense would be $12,000/4 = $3,000 per year.

After one year, the remaining useful life of the truck is four years. Therefore, the total depreciation expense over five years would be $12,000, which is still $3,000 per year.

Since one year has already passed, only four years remain. Therefore, the second year's depreciation would be $3,000 x 4/5 = $2,400.

However, since the depreciation was already taken for the first year, the depreciation expense for the second year would be $2,400 - $3,000 = -$600 (a negative value).

To account for the additional four years of useful life, the second year's depreciation must be adjusted. The total remaining depreciation is $12,000 - $3,000 = $9,000 over four years. Therefore, the depreciation expense for the second year would be $9,000/4 = $2,250.

Therefore, the answer is B) $2,250.

A Truck That Cost $12,000 Was Originally Being Depreciated Over