A company used straightline depreciation for an item of equi

A company used straight-line depreciation for an item of equipment that cost $16,750, had a salvage value of $4,000 and a six-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,675 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:

Multiple Choice

a. $1,275.

b. $4,000.

c. $2,900.

d. $6,358.

e. $3,600.

Solution

Depreciation per year=(Cost-Salvage value)/Useful life

=(16750-4000)/6=$2125/year

Hence book value at end of year 3=16750-(2125*3)=$10375

Hence depreciation now=(10375-1675)/3 =$2900.