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zhenek [66]
2 years ago
12

Cullumber Company bought equipment for $150000 on January 1, 2021. Cullumber estimated the useful life to be 5 years with no sal

vage value, and the straight-line method of depreciation will be used. On January 1, 2022, Cullumber decides that the business will use the equipment for a total of 6 years. What is the revised depreciation expense for 2022?
a. $30000
b. $12000
c. $24000
d. $20000
Business
1 answer:
Leviafan [203]2 years ago
5 0

Answer:

Annual depreciation 2022= $24,000

Explanation:

Giving the following information:

Purchase price= $150,000

Useful life= 5 years

Salvage value= $0

<u>First, we need to calculate the annual depreciation for 2021:</u>

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (150,000 - 0) / 5

Annual depreciation= $30,000

<u>Now, the revised depreciation:</u>

Annual depreciation= (150,000 - 30,000) / 5

Annual depreciation= $24,000

We divide by 5 years because one year has passed.

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