On January 1, 2013, Plover Ltd.purchased a machine for $330,000 and depreciated it using the straight-line method with an estimated useful life of eight years with no residual value.On January 1, 2016, Plover determined that the machine had a useful life of only six years from the date of acquisition, but will have a residual value of $30,000.An accounting change was made in 2016 to reflect these additional facts.At December 31, 2017, the accumulated depreciation for this machine should have a balance of
A)$182,500.
B)$187,500.
C)$241,250.
D)$250,000.

Question

Quizplus · Accepted Answer

The total depreciation expense for the machine is ($330,000 - $30,000)/8 = $37,500 per year for the first three years. 
In 2016, the remaining useful life of the machine is 6 - 3 = 3 years, and its book value is $37,500 x 3 = $112,500. 
The difference between the book value and the residual value ($112,500 - $30,000) = $82,500 should be depreciated over the next three years, i.e. $27,500 per year. 
At December 31, 2017, the accumulated depreciation should be $37,500 x 3 + $27,500 x 2 = $187,500. 
Therefore, the correct answer is C.