When originally purchased,a vehicle had cost $23,000,with an estimated residual value of $1,500,and an estimated useful life of 8 years.After 4 years of straight-line depreciation,the estimated useful life was revised from 8 to 6 years,but with zero residual value.The depreciation expense in year 5 should be

Question

Quizplus · Accepted Answer

The initial annual depreciation was ($23,000 - $1,500) / 8 = $2,687.50. After 4 years, accumulated depreciation is 4 * $2,687.50 = $10,750. The book value is $23,000 - $10,750 = $12,250. With the revised useful life of 6 years and zero residual value, the remaining life is 2 years. The new annual depreciation is $12,250 / 2 = $6,125.00.

When Originally Purchased,a Vehicle Had Cost $23,000,with an Estimated Residual