Answer :
Answer:
Depreciation expense for 2018 would be $28,853.33
Explanation:
Cost = $108,200
Residual value = $0
Useful life = 10 years
Now,
Annual straight line depreciation = [tex]\frac{Cost-Residual Value}{Useful life}[/tex]
Annual straight line depreciation = [tex]\frac{108,200 - 0}{10}[/tex]
Annual straight line depreciation = [tex]\frac{108,200}{10}[/tex]
Annual straight line depreciation = $10,820
Accumulated depreciation for two years i.e., 2016 and 2017 would be:
Accumulated depreciation = 2 × $10,820
Accumulated depreciation = $21,640
Book value (at the end of year 2017) = Cost - Accumulated depreciation
Book value (at the end of year 2017) = $108,200 - $21,640
Book value (at the end of year 2017) = $86,560
Revised useful life = 5 years
No. years asset has been used = 2 years
Remaining useful life = 3 years
Therefore, depreciation expense for the remaining three year would be:
Revised depreciation expense = [tex]\frac{Book value at the end of 2017 - Residual Value}{Remaining useful life}[/tex]
Revised depreciation expense = [tex]\frac{86,560 - 0}{3}[/tex]
Revised depreciation expense = [tex]\frac{86,560}{3}[/tex]
Revised depreciation expense = $28,853.33