Exhibit 22-3 Katrina Company acquired a truck on January 1, 2014, for $140,000. The truck had an estimated useful life of five years with no salvage value. Katrina used straight-line depreciation for the truck. On January 1, 2015, Katrina revises the estimated useful life of the truck. Katrina made the accounting change in 2015 to reflect the extended useful life.

-Refer to Exhibit 22-3. If the revised estimated useful life of the truck is a total of eight years, Katrina should report in its 2015 income statement depreciation expense of

Question

-Refer to Exhibit 22-3. If the revised estimated useful life of the truck is a total of eight years, Katrina should report in its 2015 income statement depreciation expense of

Quizplus · Accepted Answer

The truck's original depreciation was $28,000 per year ($140,000/5 years). After one year, the book value is $112,000 ($140,000 - $28,000). With a revised total life of 8 years, 7 years remain. The new annual depreciation is $16,000 ($112,000/7 years).

Exhibit 22-3 Katrina Company Acquired a Truck on January 1