Question

Harris Co. takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of disposition. Data relating to one of Harris's depreciable assets at December 31, 2015 are as follows: Acquisition year 2013 Cost $210,000 Residual value 30,000 Accumulated depreciation 144,000 Estimated useful life 5 years Using the same depreciation method as used in 2013, 2014, and 2015, how much depreciation expense should Harris record in 2016 for this asset? a. $24,000b. $36,000c. $42,000d. $48,000

Answer 1

A.24,000

Step-by-step explanation:

Depreciation expense for the year 2016 can be calculated as follows

DATA

Acquisition year = 2013

Cost = $210,000

Residual value = 30,000

Accumulated depreciation = 144,000

Estimated useful life = 5 years

Remaining useful life = 5 + 4 + 3 + 2 + 1 = 15

Solution

Year Cost Remaining life Depreciation fraction Depreciation exp

1 180,000 5 5/15 $60,000

2 180,000 4 4/15 $48,000

3 180,000 3 3/15 $36,000

4 180,000 2 2/15 $24,000

5 180,0000 1 1/15 $12,000

Harris Co. should record $24,000 in 2016 for this asset