On January 1,2012,Ziskin Company spent $3,000 on an asset (equipment)to improve its quality.The asset had been purchased on January 1,2009 for $14,000.The asset had a $2,000 salvage value and a 6-year life.Ziskin uses straight-line depreciation.What would be the amount of depreciation expense for 2012?

Question

Quizplus · Accepted Answer

The asset had already been purchased on January 1, 2009 and had a useful life of 6 years. Therefore, as of January 1, 2012, the asset had already been in use for 3 years (2009, 2010, and 2011). The cost of the asset ($14,000) minus the salvage value ($2,000) is $12,000. Since it has a useful life of 6 years, the annual depreciation expense would be $12,000/6 = $2,000. Therefore, the depreciation expense for 2012 would be $2,000 as the asset was already in use for 3 years.

On January 1,2012,Ziskin Company Spent $3,000 on an Asset (Equipment)to