Question

Carla Vista Co. bought equipment for $600000 on January 1, 2021. Carla Vista estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2022, Carla Vista decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2022?

$200000.

$150000.

$100000.

$80000.

Answer 1

· Correct Answer = Option #3: $ 100,000 revised depreciation for 2022

A	Original cost	$600,000.00
B	Original salvage value	$0.00
C = A - B	Original depreciable cost	$600,000.00
D	Original life	3
E = C/D	Straight line annula Depreciation	$200,000.00
F = E x 1	1 Year balance of Accumulated Depreciation for 2021	$200,000.00
G = A - F	Book value at point of revision	$400,000.00
H	Revised salvage value	$0
I = G - H	Remaining depreciable cost	$400,000
J = 5 years - 1 years passed	Years of life remaining	4
E = C/D	Revised annual depreciation from 2022	$100,000