When originally purchased, a vehicle had an estimated useful life of 9 years. Th

Question

When originally purchased, a vehicle had an estimated useful life of 9 years. The vehicle cost $52,000 and its estimated residual value is $4,000. After 3 years of straight-line depreciation, the asset’s total estimated useful life was revised from 9 years to 6 years and there was no change in the estimated residual value. The Depreciation Expense in year 4 is:

$7,725

$10,667

$8,000

$2,053

When originally purchased, a vehicle had an estimated useful life of 9 years. The vehicle cost $52,000 and its estimated residual value is $4,000. After 3 years of straight-line depreciation, the asset’s total estimated useful life was revised from 9 years to 6 years and there was no change in the estimated residual value. The Depreciation Expense in year 4 is:

Explanation / Answer

Cost of purchase = 52000

Depreciable cost = 52000-salvage value = 52000-4000 = 48000

Depreciation for 3 years = 48000/9*3 = 16000

Current value = 52000-16000 = 36000

Adjustement of new depreciation =(36000-4000)/6 = 32000/6 = $8000(Answer)

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