Use the following information for questions 53 and 54.
Swift Company purchased a machine on January 1, 2012, for $600,000. At the date of acquisition, the machine had an estimated useful life of six years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2015, Swift determined, as a result of additional information, that the machine had an estimated useful life of eight years from the date of acquisition with no salvage. An accounting change was made in 2015 to reflect this additional information.
-What is the amount of depreciation expense on this machine that should be charged in Swift's income statement for the year ended December 31, 2015?
A) $ 60,000
B) $ 75,000
C) $120,000
D) $150,000

Question

Quizplus · Accepted Answer

The original depreciation per year is $600,000 / 6 = $100,000. By the end of 2014 (three years of depreciation), $300,000 has been depreciated. With the new useful life of 8 years, the remaining book value of $300,000 ($600,000 - $300,000) will be spread over the remaining 5 years (2015-2019), resulting in an annual depreciation of $300,000 / 5 = $60,000.

Use the Following Information for Questions 53 and 54