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On January 1, 2008, Jamacha Company purchased some equipment for $15,000
On January 1, 2008, Jamacha Company purchased some equipment for $15,000. The estimated salvage value and useful life are $3,000 and 4 years, respectively. On January 1, 2010, the company determines that the asset's remaining useful life is 3 years. What is the revised depreciation expense for 2010 if the company uses the straight-line method?
a. $2,000
b. $2,250
c. $4,000
d. $2,500
Expert Solution
Answer:
a .
Step-by-Step explanation
Original Depreciation Schedule: ($15,000 - $3,000) / 4 years = $3,000 per year
After 2 years accumulated depreciation = $3,000 * 2 = $6,000
Book Value on Jan. 1, 2010: $15,000 - $6,000 = $9,000
Revised depreciation: ($9,000 book value - $3,000 salvage) / 3 years = $2,000
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