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An asset purchased on January 1 for $48,000 has an estimated salvage value of $3,000
An asset purchased on January 1 for $48,000 has an estimated salvage value of $3,000. The current year's depreciation expense is $5,000 and the balance of the Accumulated Depreciation account, after adjustment, is $20,000. If the company uses the straight-line method, what is the asset's remaining useful life?
-
- 4 years
- 8 years
- 5 years
- 9 years
Expert Solution
Answer:
c .
Step-by-Step explanation
Assets remaining useful life = Total useful life - Number of periods machine was used
= 9 Years - 4 years
= 5 years
Where,
Total useful life = (Cost - Salvage value) / Annual depreciation
= ($48,000 - $3,000) / $5,000
= $45,000 / $5,000
= 9 years
Number of period machine was used = Accumulated depreciation / Annual depreciation expense
= $20,000 / $5,000
= 4 years
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