Muller Corporation purchased a new truck on January 1, 2012 for $55,000 cash. Muller estimated the truck would have a salvage value of $4,000 at the end of the useful life of 5 years. On January 2, 2016 Muller had to replace the engine of the truck paying $7,500 cash. Due to the replaced engine, Muller estimates that the truck will continue a productive life for another four years.
Required:
Assuming straight-line depreciation is used, calculate the depreciation expense for 2016.

Question

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The Answer of Muller Corporation purchased a new truck on January 1, 2012 for $55,000 cash. Muller estimated the truck would have a salvage value of $4,000 at the end of the useful life of 5 years. On January 2, 2016 Muller had to replace the engine of the truck paying $7,500 cash. Due to the replaced engine, Muller estimates that the truck will continue a productive life for another four years.
Required:
Assuming straight-line depreciation is used, calculate the depreciation expense for 2016.

Muller Corporation Purchased a New Truck on January 1, 2012