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. Assume Dugger employs straight-line depreciation.Additionally assume that at the beginning of 20X4 Dugger finds a $200 attachment that extends the life of the equipment 2 years beyond the original estimate.What will be the depreciation expense in 20X4?
A)$4,800
B)$4,667
C)$3,367
D)$4,000
E)$4,200

Question

Quizplus · Accepted Answer

The original depreciation was calculated as ($24,000 - $4,000) / 5 = $4,000 per year. With the new information, the machine's useful life is now 7 years (5 original + 2 extended), and the salvage value is $0. The new depreciation is ($24,000 - $0) / 7 = $3,429 per year. Since $200 was spent on an attachment, the adjusted depreciation for 20X4 is $3,429 - $200 = $3,367.

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