Answer:
The amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:
d. 2400
Explanation:
The company uses the straight-line method of depreciation, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of equipment − Salvage Value)/Useful Life
From year 1 to year 3:
Annual Depreciation Expense = ($12,000 - $2,000)/5 = $2,000
Accumulated Depreciation (end of year 3) = $2,000+$2,000+$2,000=$6,000
Book value of the equipment (end of year 3) = $12,000 - $6,000= $6,000
After depreciating the asset for three complete years, the salvage value was reduced to $1200 and its useful life remained the same. In the 2 remaining year of the asset useful life:
Annual Depreciation Expense = ($6,000 - $1,200)/2 = $2,400
