Exhibit 11-03 On January 1, 2014, Wheeler, Inc. purchased some equipment for $3,900. The equipment had an estimated life of five years and an expected residual value of $200. On July, 1, 2016, the equipment was sold for $1,000.
-Refer to Exhibit 11-03, what is the amount in the accumulated depreciation account prior to bring the depreciation expense up to date before the disposal?

Question

Quizplus · Accepted Answer

The equipment was purchased on January 1, 2014, and sold on July 1, 2016. This means that the equipment was used for two and a half years. The equipment had an estimated life of five years, so the depreciation expense for each year is $3,900 / 5 = $780. The accumulated depreciation account prior to bringing the depreciation expense up to date before the disposal is $780 * 2.5 = $1,950.

Exhibit 11-03 on January 1, 2014, Wheeler, Inc