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Homework answers / question archive / 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

Accounting

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?

    1. 4 years
    2. 8 years
    3. 5 years
    4. 9 years

 

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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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