Question

Equipment was purchased for $94700 on January 1, 2021. Freight charges amounted to $3800 and there was a cost of $12000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $25000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2022 if the straight-line method of depreciation is used

Answer 1

Answer:

$34,200

Explanation:

Step 1 : Cost of Equipment

Cost of Equipment include Purchase Price plus other costs directly incurred to put the asset in location and condition intended for use by management

Cost of Equipment = $110,500

Step 2 : Depreciation

Depreciation = (Cost - Residual Value)/ Useful Life

                       = $17,100

Step 3 : Accumulated Depreciation

Accumulated Depreciation =  $17,100 x 2 = $34,200

Therefore,

the amount of accumulated depreciation at December 31, 2022 is $34,200