Equipment was purchased for $85,000 on January 1, 2018. 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, 2019, if the straight-line method of depreciation is used?

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The total cost of the equipment is $98,500 ($85,000 + $3,500 + $10,000). The depreciable amount is $83,500 ($98,500 - $15,000 salvage value). Using the straight-line method over 5 years, annual depreciation is $16,700 ($83,500 / 5). For two years (2018 and 2019), accumulated depreciation is $33,400 ($16,700 x 2).

Equipment Was Purchased for $85,000 on January 1, 2018