A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000 and a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:

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Quizplus · Accepted Answer

The correct answer is A.The depreciation expense for the remaining two years is $2,400. The original cost of the equipment was $12,000, and the salvage value was reduced to $1,200. The depreciable base is $10,800 ($12,000 - $1,200). The depreciation expense for the remaining two years is $5,400 ($10,800 / 5 years).

A Company Used Straight-Line Depreciation for an Item of Equipment