Question

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $25,000 and its estimated residual value is $3,000. After 3 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 5 years and there was no change in the estimated residual value. The Depreciation Expense in year 4 is:

Answer 1

Answer:

$5703.66

Step-by-step explanation:

Here are some Depreciation Formula that come in handy to solve the task above.

1:

Straight Line Depreciation Method = (Cost of an Asset - Residual Value) / Useful life of an Asset

2:

Diminishing Balance Method = (Cost of an Asset × Rate of Depreciation)/100

3:

Unit of Product Method = ( Cost of an Asset - Salvage Value) / Useful life in the form of Units Produced

Using Equation 1.

Straight Line Depreciation Method = (Cost of an Asset - Residual Value) / Useful life of an Asset

Cost of an Asset = $25,000

Residual Value = $3,000

Useful life of an Asset = 1+2+3+4+5+6+7+8 = 6

Depreciation Expense= ($25,000- $3,000) × 8 /36

= $22,000/36 = $4888.88

For year 4, the calculation uses the asset’s book value

(($25,000-$4888.88) -$3,000) × 5/15

=

($20111.11 - $3,000) × 5 / 15

Depreciation Expense = $5703.66

Answer 2

Answer: $11,600

Step-by-step explanation: