Dugger Excavating bought a machine for $24,000 on January 1,20X3,with a useful life of 5 years and a salvage value of $4,000.At the beginning of 20X4,Dugger finds the residual value will be zero. Assuming Dugger employs straight-line depreciation,what will be the depreciation expense in 20X4?
A)$4,000
B)$5,000
C)$6,000
D)$4,750
E)$8,500

Question

Quizplus · Accepted Answer

Initially, the depreciation expense for each year under the straight-line method is calculated as (Cost - Salvage Value) / Useful Life. Initially, it was ($24,000 - $4,000) / 5 = $4,000 per year. However, at the beginning of 20X4, the salvage value is revised to $0, and one year of depreciation has already been taken. The revised depreciation expense for the remaining 4 years is calculated as (Cost - Accumulated Depreciation - New Salvage Value) / Remaining Useful Life = ($24,000 - $4,000 - $0) / 4 = $5,000.

Dugger Excavating Bought a Machine for $24,000 on January 1,20X3,with