When originally purchased,a vehicle had an estimated useful life of 8 years.The vehicle cost $25,000 and its estimated residual value is $3,000.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:
A)$6,875.
B)$4,400.
C)$4,125.
D)$1,650.

Question

Quizplus · Accepted Answer

The amount of depreciable cost as of the end of year 3 is: ($25,000 − $3,000)− [($22,000 ÷ 8)× 3] = $13,750.The remaining depreciation will be recorded over the remaining 2-year useful life: $13,750 ÷ 2 = $6,875

When Originally Purchased,a Vehicle Had an Estimated Useful Life of 8