Question

Lexis Company purchased equipment on January 1, 2012 for $35,500. The estimated useful life of the equipment was 7 years and the estimated residual value was $4,000. After using the straight-line method of depreciation for 3 years, the estimated useful life was revised to 9 years on January 1, 2015. How much is depreciation expense for 2015?

Answer 1

Answer:

The depreciation expense for 2015 is $2,000

Explanation:

The computation of the depreciation expense is shown below:

= (Original cost - residual value) ÷ useful life

= ($35,500 - $4,000) ÷ 7 years

= 4,500

The depreciation for three years would be

= 4,500 × 3 years

= $13,500

The remaining amount would be

= $35,500 - $13,500

= $22,000

So, the depreciation expense for 2015 would be

= ($22,000 - $4,000) ÷ 9 years

= 2,000