When originally purchased,a vehicle had an estimated useful life of eight years.The vehicle cost $23,000 and its estimated salvage value is $1,500.After four years of straight-line depreciation,the asset's total estimated useful life was revised from eight years to six years and there was no change in the estimated salvage value.The depreciation expense in year 5 equals:
A)$5,375.00
B)$2,687.50
C)$5,543.75
D)$10,750.00
E)$2,856.25

Question

Quizplus · Accepted Answer

The correct answer is A because the depreciation expense for year 5 is $5,375.00. This is calculated by taking the cost of the vehicle minus the salvage value and dividing by the remaining useful life. In this case, the cost of the vehicle is $23,000, the salvage value is $1,500, and the remaining useful life is 2 years. Therefore, the depreciation expense for year 5 is ($23,000 - $1,500) / 2 = $5,375.00.

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