Peavey enterprises purchased a depreciable asset for $29,500 on april 1, year 1. the asset will be depreciated using the straight-line method over its four-year useful life. assuming the asset's salvage value is $3,500, what will be the amount of accumulated depreciation on this asset on december 31, year 3? $21,667 $17,875 $6,500 $5,417 $5,417

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Business

Mariah Burch

28 October, 20:51

Peavey enterprises purchased a depreciable asset for $29,500 on april 1, year 1. the asset will be depreciated using the straight-line method over its four-year useful life. assuming the asset's salvage value is $3,500, what will be the amount of accumulated depreciation on this asset on december 31, year 3? $21,667 $17,875 $6,500 $5,417 $5,417

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Heaven · Answer 1

Cost price of the asset = $29500 less

Salvage value after four years = $3500

Amount to be written off as depreciation over a period of four years = $26,000

Therefore, yearly depreciation = 26,000/4 = $6500.

However, depreciation for first year, starting from 1st April to 31st

December, is only for 9 moths. Therefore the amount of depreciation for the

first year = 6500 x 9/12 = $4875.

Depreciation for the second year = $6500

Depreciation for the third year = $6500.

Accumulated depreciation for the three years = 4875 + 6500 + 6500 = $17875.