Banger Co. purchased delivery equipment for $56,000 on January 1, 2018. Banger e
ID: 2590064 • Letter: B
Question
Banger Co. purchased delivery equipment for $56,000 on January 1, 2018. Banger estimated that the delivery equipment would have a life of five years and a $6,000 salvage value. Banger uses the straight-line method to compute the depreciation expense. At the beginning of year 4 (2021) Banger revised the useful life of the delivery equipment to be a total of seven years. The estimated salvage value was not changed. Compute the depreciation expense for each of the seven years.
Depreciation Expense Years 2019 2020 2022 2023Explanation / Answer
Depreciable amount for 5 years $56,000-$6,000= $50,000
$10,000 per year sraight line method
2018 - $10,000
2019 - $10,000
2020 - $1,0000
Revised useful life extended to 7 years
Remaining amount to be depeciated ($50,000-$30,000)=$20,000 for 4 years
$ 5,000 per year
2021 - $ 5,000
2022 - $ 5,000
2023 - $ 5,000
2024 - $ 5,000
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