Ask Question
22 March, 23:57

Equipment was purchased for $85,000 on January 1, 2016. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used?

+4
Answers (1)
  1. 23 March, 01:19
    0
    Accumulated depreciation = $33,400

    Explanation:

    We have to take into account that the total purchasing price of the equipment is formed by the purchasing price per se, and all necessary cost until it is ready to function.

    Purchasing price = 85,000 + 3,500 + 10,000 = $98,500

    It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life.

    To determine the accumulated depreciation at the end of 2017, first, we need to calculate the annual depreciation using the straight-line method.

    Annual depreciation = (original cost - salvage value) / estimated life (years)

    Annual depreciation = (98,500 - 15,000) / 5 = $16,700

    Accumulated depreciation = 16,700*2 = $33,400
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Equipment was purchased for $85,000 on January 1, 2016. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers