Question

A plant asset was purchased on January 1 for $59200 with an estimated salvage value of $15000 at the end of its useful life. The current year's depreciation expense is $3400 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $23800. The remaining useful life of the plant asset is

Answer 1

The remaining useful life of the plant asset is 6 years.

Step-by-step explanation:

Under straight-line method, depreciation expense is (cost - residual value) / No of years = ($59,200 - $15,000) / X years = $3400 yearly depreciation expense.

Depreciation expense = $44,200/X years = $3,400

$3,400X = $44,200

X = Estimated useful life = $44,200/$3,400 = 13 years

Since accumulated depreciation account at the end of the year is $23,800,

$23,800 / $3,400 = 7 years (total years of depreciation)

Therefore, the remaining useful life is 13 - 7 = 6 years.