Question

Nankl Corporation purchased equipment on January 1, 2016. for $677,000. In 2016 and 2017, Nanki depreciated the asset on a straight-line basis with an estimated useful life of eight years and a $13,000 residual value. In 2018, due to changes in sed the useful life to a total of 4 years with no residual value. What depreciation would Nanki record for the year 2018 on this equipment? (Round your answer to the nearest dollar amount.) Multiple Choice o $110,667 o O $111,380 O O $255,500

Answer 1

• Correct Answer = Option #3: $ 255,500
• Working

A	Original cost	$                  677,000
B	Original salvage value	$                     13,000
C = A - B	Original depreciable base	$                  664,000
D	Original expected life [years]	8
E = C/D	Annual 12 month depreciation	$                     83,000
	Depreciation for:
	2016	$                     83,000
	2017	$                     83,000
		$                              -
F	Total Accumulated Depreciation till estimates changed	$                  166,000
G = A - F	Book Value at the time of change of estimate	$                  511,000
H	New salvage value	$                              -
I = G - H	New depreciable base	$                  511,000
J	New expected life [years]	4
K	Life already expired	2
L = J - K	Remaining life	2
M = I/L	Revised depreciation expense from 2020	$                  255,500