Question

On January 1, 2010, Wayne's Waffle House purchased a freezer for $45,000. The freezer had an estimated useful life of 10 years and an estimated residual value of $3,000 at the time of purchase. Wayne spent $10,000 on January 1, 2012, to replace the freezer motor. This replacement increased the freezer's life by 5 years and the residual value by $2,000. Assuming that straight-line depreciation is used, what will be the depreciation expense for 2012

Answer 1

$3200

Step-by-step explanation:

Calculation to determine what will be the depreciation expense for 2012

Using this formula

2012 depreciation expense=Estimated residual value+(Residual value/Estimated useful life)

Let plug in the formula

2012 depreciation expense=$3,000+($2,000/10 years)

2012 depreciation expense=$3,000+$200

2012 depreciation expense=$3,200

Therefore what will be the depreciation expense for 2012 is $3,200