When originally purchased,a vehicle had an estimated useful life of 8 years.The vehicle cost $23,000 and its estimated salvage value is $1,500.After 4 years of straight-line depreciation,the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value.The depreciation expense in year 5: equals:
A)$ 5,375.00.
B)$ 2,687.50.
C)$ 5,543.75.
D)$10,750.00.
E)$ 2,856.25.

Question

Quizplus · Accepted Answer

Accumulated Depreciation through the end of year 4:
(Cost of Asset - Salvage Value)/Estimated Useful Life * Years Elapsed
($23,000 - $1,500)/8 * 4 = $10,750
Depreciation in Year 5 = (Cost of Asset - Accumulated Depreciation - Salvage
Value)/Remaining Estimated Useful Life
($23,000 - $10,750 - $1,500/2 = $5,375

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