How do i calculate this problem. An asset was purchased for $150,000. It had an estimated salvage value of $30,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $24,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in 6 years would be?

See:

http://www.jiskha.com/display.cgi?id=1259861180

equipment costing 60,000 was purchased on 1/1/2014 and has a 5 year useful life

To calculate the depreciation expense in year 6, you will need to consider the updated salvage value and the remaining useful life of the asset.

First, let's calculate the annual depreciation expense using the initial values provided for the asset:

Depreciation Expense = (Purchase Cost - Estimated Salvage Value) / Estimated Useful Life

Depreciation Expense = ($150,000 - $30,000) / 10 years
Depreciation Expense = $120,000 / 10 years
Depreciation Expense = $12,000 per year

Now, we need to account for the updated salvage value and calculate the remaining useful life after 5 years of use:

Remaining Useful Life = Total Useful Life - Number of Years Used
Remaining Useful Life = 10 years - 5 years
Remaining Useful Life = 5 years

Next, we calculate the annual depreciation expense for the remaining useful life using the updated salvage value:

Depreciation Expense for Remaining Useful Life = (Remaining Book Value - Updated Salvage Value) / Remaining Useful Life

To find the remaining book value, we subtract the accumulated depreciation after 5 years from the initial purchase cost:

Remaining Book Value = Purchase Cost - Accumulated Depreciation
Remaining Book Value = $150,000 - (5 years x $12,000 per year)
Remaining Book Value = $150,000 - $60,000
Remaining Book Value = $90,000

Now, we can calculate the depreciation expense for the remaining useful life:

Depreciation Expense for Remaining Useful Life = ($90,000 - $24,000) / 5 years
Depreciation Expense for Remaining Useful Life = $66,000 / 5 years
Depreciation Expense for Remaining Useful Life = $13,200 per year

Therefore, the depreciation expense in year 6 would be $13,200.