Question

Land improvements were put into service on January 1st. The cost was $80,000, and the estimated salvage value was $20,000. The current year's depreciation expense was $5,000 calculated on the straight-line basis and the balance in the Accumulated Depreciation account at the end of this year was $25,000. The remaining useful life of these land improvements is ________ years.

Answer 1

Answer:

7

Explanation:

Depreciation expense using the straight line depreciation method = (Cost of asset - Salvage value) / useful life

Useful life isn't given

Cost of asset = $80,0000

Salvage value = $20,000

Depreciation expense = $5,000

$5,000 = ($80,000 - $20,000) / x

$5,000 = $60,000 / x

X = 12

The useful life is 12 years

If accumulated depreciation is $25,000, the number of years so far would be $25,000 / $5,000 = 5 years

Remaining year = 12 - 5 = 7 years

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