Question

Joe's Copy Shop bought equipment for $60,000 on January 1, 2013. Joe estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2014, Joe decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2014?

Answer 1

The revised depreciation expense for 2014 would be $12,000.

Step-by-step explanation:

The original purchase cost of the equipment was $60,000 and Joe estimated its useful life to be 3 years with no salvage value. This means that Joe planned to depreciate the equipment by $20,000 per year using the straight-line method of depreciation. However, on January 1, 2014, Joe decides to change the useful life of the equipment to 5 years.

To calculate the revised depreciation expense for 2014, we need to determine the new annual depreciation amount. Since the useful life was changed to 5 years and there is no salvage value, the new annual depreciation amount is $60,000 divided by 5, which is $12,000. Therefore, the revised depreciation expense for 2014 would be $12,000.

-