Homework Answers
Answer:
Correct answer is:
a. $54,095
Explanation:
Equipment acquired on 1st Jan 2014 for $580,000
Residual value = $12,000
Before Revision of useful life:
Useful life = 7 years
Depreciation per year under straight line method = (Cost - Residual value) / Useful life = ($580,000 - $12,000) / 7 = $81,142.86
As such book value of equipment at the end of 2016 or at beginning of 2017 is $336,571.42
On Revision of useful life:
Total estimated useful life has been revised to = 9 years
Remaining useful life at start of 2017 = 9 - 3 = 6 years
Residual value remains same.
Depreciation expense for 2017 = ($336,571.42 - $12,000) / 6 = $54,095
Hence:
Depreciation expense for 2017 = $54,095
As such option a is correct and other options b, c, d are incorrect.
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