Question

ABC Corporation has been depreciating an asset for 5 years that was originally estimated to have a 10 year life. The asset cost $80,000 and had a salvage value of $5,000 with straight line depreciation. At the beginning of the 6 year, they revised the estimate of useful life to a total of 15 years and the salvage value is still $5,000. What is depreciation expense for the 6 year?

Answer 1

Ans:

Depreciation=cost of the asset-salvage value/useful life

    80,000-5,000/10=$7,500 per year

Accumulated Depreciation for 5years 7,500$*5years

                =37,500$

Depreciable value at the beginning of 6th year

80,000-37,500=42,500$

Revised estimated useful life=15years

remaining estimated useful life=10years(15-5)

so depreciation for 6th year=42,500-5,000/10years

Depreciation expense for 6th year=$3,750

answered by: anonymous