At the beginning of 2013,Reno revised the expected life to eight years.The annual amount of depreciation expense for each of the remaining years would be:
A) $6,220.
B) $7,160.
C) $6,160.
D) $7,700.

Question

Quizplus · Accepted Answer

To calculate the annual depreciation expense, we need to determine the depreciable cost of the asset first. Depreciable cost = original cost - salvage value = $50,000 - $2,000 = $48,000.

The straight-line depreciation method is used, so we divide the depreciable cost by the revised expected life of the asset:

Annual depreciation expense = ($48,000 ÷ 8) = $6,000

However, we need to account for the fact that part of 2013 has already passed, so we need to subtract the depreciation expense for that period (January - May, or 5 months out of 12) from the total.

$6,000 × (5/12) = $2,500

$6,000 - $2,500 = $3,500

Therefore, the annual amount of depreciation expense for each of the remaining years would be $6,160 ($3,500 + $6,000). The answer is C.

At the Beginning of 2013,Reno Revised the Expected Life to Eight