An asset was purchased for $140,000.It had an estimated salvage value of $35,000 and an estimated useful life of 10 years.After 5 years of use, the estimated salvage value is revised to $28,000 but the estimated useful life is unchanged.Assuming straight-line depreciation, depreciation expense in Year 6 would be
A)$21,000.
B)$14,875.
C)$11,900.
D)$17,500.

Question

Quizplus · Accepted Answer

The book value at the end of Year 5 is $140,000 - (5 * $10,500) = $87,500. The new depreciation expense is calculated as (Book Value - Revised Salvage Value) / Remaining Life = ($87,500 - $28,000) / 5 = $11,900.

An Asset Was Purchased for $140,000