Question

When originally purchased, a vehicle costing $24,300 had an estimated useful life of 8 years and an estimated salvage value of $2,300. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:

Answer 1

	Depreciation= (Cost-Salvage Value)/Useful life
			Amount $
	Cost	a	$            24,300.00
	Salvage Value	b	$              2,300.00
	Useful Life(Years)	c	8
	Depreciation p.a.	d=(a-b)/c	$              2,750.00	(24,300-2300)/8
	Depreciation charged for 4 years	e=d*4	$                  11,000	(2750*4)
	Book value after 4 years	f=a-e	$                  13,300	(24300-11000)
	Remaining useful life(years)	g=c-4	4.00	(8-4)
	Revised Remaining useful life(years)	h=g-2	$                      2.00	(4-2)
	Depreciation to be charged for 5th year	i=(f-b)/h	$              5,500.00	(13,300-2300)/2