Asked by
Keannah Ocasio
on Dec 16, 2024
Verified
Nicholson Company purchased equipment on January 1 2015 for $80000 with an estimated salvage value of $20000 and estimated useful life of 8 years. On January 1 2017 Nicholson decided the equipment will last 12 years from the date of purchase. The salvage value is still estimated at $20000. Using the straight-line method the new annual depreciation will be:
A) $4500.
B) $5000.
C) $6000.
D) $6667.
Straight-Line Method
A depreciation method where an equal amount of depreciation is charged for each year of the asset's useful life.
Annual Depreciation
The amount of expense allocated during a year to account for the reduction in value of a fixed asset over its useful life.
Salvage Value
The presumed end value of an asset following the completion of its useful life.
- Scrutinize the effects of altering estimates (useful life and salvage value) on the depreciation expense.
- Implement the straight-line approach to depreciation and recognize its implications for financial statements.
Verified Answer
DK
Learning Objectives
- Scrutinize the effects of altering estimates (useful life and salvage value) on the depreciation expense.
- Implement the straight-line approach to depreciation and recognize its implications for financial statements.