Question

# Lexis Company purchased equipment on January 1, 2012 for \$35,500. The estimated useful life of the...

Lexis Company purchased equipment on January 1, 2012 for \$35,500. The estimated useful life of the equipment was 7 years and the estimated residual value was \$4,000. After using the straight-line method of depreciation for 3 years, the estimated useful life was revised to 9 years on January 1, 2015. How much is depreciation expense for 2015? A) \$2,444 B) \$3,000 C) \$2,000 D) \$3,667

Depreciation expense for 2015 =\$3000

Working notes for the above answer;

Lexis Company purchased equipment on January 1, 2012

So Deprecation for 2012,2013 and 2015 is

={(35500-4000)/7 year} x 3 year

=\$4500 per year Deprecation x 3 year

=13500 deprecation for 3 year

 Book value as on 1-1-12 35500 Less: 3 year deprecation 13500 Book value as on 1-1-15 22000

, the estimated useful life was revised to 9 years on January 1, 2015.

Now revised depreciation

=(22000-4000)/6 year

=1800/6

=\$3000 deprecation per year