Answer:
Depreciation expense for the year ended December 31st, 2022 = $14,000.
Explanation:
<u>Determine the initial depreciable cost.</u>
Initial depreciable cost = Acquisition cost - Initial Salvage value.
Initial depreciable cost = 215,000 - 23,000.
Initial depreciable cost = 192,000.
<u>Determine the initial annual depreciation expense.</u>
The initial annual depreciation expense = Initial depreciable cost/Initial useful life.
The initial annual depreciation expense = 192,000/ 10.
The initial annual depreciation expense = $19,200.
<u>Accumulated depreciation as of December 31 , 2021 .</u>
The initial accumulated depreciation = initial annual depreciation expense × number of useful years.
The initial accumulated depreciation = 19,200 × 5.
The initial accumulated depreciation as of December 31 , 2021 = $96,000.
<u>New useful year</u>
Remaining useful years = New number of useful year - Utilized number of useful year.
Remaining useful years = 12 - 5 = 7 years.
<u>Determining the new depreciable cost.</u>
The new depreciable cost = Current book value - New salvage value.
Current book value can be computed as: Acquisition cost - initial accumulated depreciation.
Current book value = 215,000 - 96,000 = $119,000.
The new depreciable cost = Book value - New salvage value.
The new depreciable cost = 119,000 - 21,000.
The new depreciable cost = $98,000.
<u>Determine the new annual depreciation expense.</u>
The new annual depreciation expense = new depreciable cost/remaining number of useful life.
The new annual depreciation expense = 98,000/7.
The depreciation expense for the year ended December 31st, 2022 = $14,000.
<u />