Clayton, Inc purchased a van on January 1, 2016, for $850,000
Estimated life of the van was five years, and its estimated residual value was $91,000. Clayton uses the straight-line method of depreciation. At the beginning of 2018, the company revised the total estimated life of the asset from five years to four years. The estimated residual value remained the same as estimated earlier. Calculate the depreciation expense for 2018.
A) $273,200
B) $227,700
C) $113,850
D) $136,600
B .Depreciation per year = (Cost - Residual value) / Useful life
Depreciation per year = ($850,000 - $91,000 ) / 5 = $151,800
Depreciation provided in the books = $151,800 x 2 years = $303,600
Revised depreciation for the year 2018 = ($850,000 - $303,600 - $91,000 ) / 2 = $227,700
You might also like to view...
Taking risks with a coworker about one of his or her new ideas is a way of demonstrating trust
Indicate whether the statement is true or false
If an entrepreneur outsources work, he or she
a. subcontracts work out to other companies. b. does all of the work himself. c. has employee teams to help manage. d. creates jobs to meet employee skills.