Machinery is purchased for $140 000.It is estimated that it has a useful life of 5 years and a residual value of $20 000.Using the straight-line method,the balance in the accumulated depreciation account at the end of the third year of the machine's useful life is:
A) $140 000
B) $68 000
C) $24 000
D) $72 000

Question

Quizplus · Accepted Answer

Annual depreciation expense = (cost of asset - expected residual value)/expected useful life = ($140 000 - $20 000)/5 = $24 000. Accumulated depreciation end of year 1 = $24 000, year 2 = $48 000 and end of year 3 = $72 000.

Machinery Is Purchased for $140 000