Question

Equipment was purchased for $51,000 on January 1, 2012. Freight charges amounted to $2,100 and there was a cost of $6,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $9,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2013, if the straight-line method of depreciation is used? Group of answer choices $20,040 $10,020 $8,580 $17,160

Answer 1

Answer: $20040

Explanation:

The amount of accumulated depreciation at December 31, 2013, will be calculated thus:

Cost = $51000 + $2100 + $6000 = $59100

Less: Salvage value = $9000

Depreciable cost = $50100

Annual depreciation will then be:

= $50100/5

= $10020

Accumulated depreciation at Dec 31,2013 will then be:

= $10020 × 2

= $20040