Question

Oriole Company Purchased A Depreciable Asset For $837900 On January 1, 2018. The Estimated Salvage Value Is $81000, And The Estimated Total Useful Life is 9 years. The straight-line method is used for depreciation. In 2021, Oriole changed its estimates to a total useful life of 5 years with a salvage value of $143000. What is 2021 depreciation expense?

a. $252300
b. $584100
c. $139650
d. $221300

Answer 1

Answer:

D

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($837900 - $81000) / 9 = $84,100

Depreciation expense from 2018 to the end of 2020 would be $84,100

Accumulated depreciation as at 2020 = $252,300

Book value at the beginning of 2021 = $837, 900 - $252,300 = $585,600

remaining useful life as a result of the revision = 5 - 3 = 2

Depreciation expense under the new revisions =

($585,600 - $143000) / 2 = $221,300