Use the following information for questions.
Minor Corp.purchased a machine on January 1, 2014, for $600,000.The machine is being depreciated on a straight-line basis, using an estimated useful life of six years and no residual value.On January 1, 2017, Minor 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 residual value.An accounting change was made in 2017 to reflect this additional information.
-What is the amount of depreciation expense on this machine that should be reported in Minor's income statement for calendar 2017?
A)$150,000
B)$120,000
C)$75,000
D)$60,000

Question

Quizplus · Accepted Answer

The machine was initially depreciated over 6 years, so the annual depreciation was $100,000 ($600,000/6). By 2017, 3 years of depreciation had been recorded, totaling $300,000. The remaining book value is $300,000 ($600,000 - $300,000). With the revised useful life of 8 years, 5 years remain (8 - 3). The new annual depreciation from 2017 is $60,000 ($300,000/5).

Use the Following Information for Questions