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A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is
a. 15 years.
b. 12 years.
c. 5 years.
d. 7 years.

Respuesta :

Answer:

Remaining Useful Life of the Asset =  7 years

so correct option is d. 7 years

Explanation:

given data

plant asset purchased = $75,000

salvage value = $15,000

Depreciation Expense = $5,000

Accumulated Depreciation = $25,000

to find out

remaining useful life of the plant asset

solution

we know that Remaining Useful Life of the Asset is express as

Remaining Useful Life of the Asset = Historical Cost ÷ Annual Depreciation Expense       ...............................1

put here value we get

Remaining Useful Life of the Asset = [tex]\frac{75000 - 25000 - 15000}{5,000}[/tex]

Remaining Useful Life of the Asset = [tex]\frac{35000}{5,000}[/tex]

Remaining Useful Life of the Asset =  7 years

so correct option is d. 7 years

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