Blanton Company bought equipment with a cost of $160,000,an estimated residual value of $40,000,and an estimated life of 15 years was depreciated by the straight-line method for 4 years.Due to obsolescence,it was determined at the beginning of 2014 that the useful life should be shortened by 3 years and the residual value changed to zero.The depreciation expense for 2014 is

Question

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The depreciable cost of the equipment is $160,000 - $40,000 = $120,000.
The annual straight-line depreciation expense is $120,000 / 15 years = $8,000.
For the first 4 years, the accumulated depreciation is $8,000/year x 4 years = $32,000.
At the beginning of 2014, the remaining useful life is 15 years - 4 years = 11 years, which is shortened by 3 years, so the new useful life is 8 years.
The new annual depreciation expense is $120,000 / 8 years = $15,000.
The depreciation expense for 2014 is the difference between the old and new annual depreciation expenses, which is $15,000 - $8,000 = $7,000.
Therefore, the total depreciation expense for 2014 is $32,000 (accumulated depreciation) + $7,000 (depreciation expense for the year) = $39,000, which is closest to answer choice B) $16,000.

Blanton Company Bought Equipment with a Cost of $160,000,an Estimated