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When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost...

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $51,000 and its estimated residual value is $2,000. After 3 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 years to 5 years and there was no change in the estimated residual value. The Depreciation Expense in year 4 is:

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Answer #1

answer : Depreciation expense in year 4 is $15,312.5

note: i provided the answer with out round off because you have not given the round off in the problem so answer is very sensitive .if need any clarification use comment box

given data

asset value =$51000

scrap value =$2000

life = 8 years

so depreciation using straight line method = $51000-2000 /8

=$49,000/8

=$6125

depreciation for 3 years = 3*$6125=$18,375

bookvalue of vehicle after 3 years = $51000- 18375=$ 32,625

when estiated life of vehicle revised from 8 to 5 years

year 4 depreciation = book value of asset after 3 years - scrap value /remaining life of an asset

= $32,625-2000 / 2

$30,625 / 2

= $15,312.5

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