Windsor Company purchased a depreciable asset for $300,000 on April 1, 2005.The estimated salvage value is $30,000, and the estimated total useful life is 5 years.The straight-line method is used for depreciation.What is the balance in accumulated depreciation on May 1, 2008 when the asset is sold?

Question

Quizplus · Accepted Answer

- Annual depreciation: (cost - salvage value) / useful life = ($300,000 - $30,000) / 5 = $54,000
- Accumulated depreciation as of May 1, 2008 (3 years): $54,000 x 3 = $162,000
- However, since the asset was sold, we need to calculate the depreciation up to the date of sale (May 1, 2008).
- Time since last depreciation: May 1, 2008 - April 1, 2008 = 1 month
- Depreciation for 1 month: $54,000 / 12 months = $4,500
- Accumulated depreciation on May 1, 2008: $162,000 + $4,500 = $166,500
Therefore, the correct answer is (D) $166,500.

Windsor Company Purchased a Depreciable Asset for $300,000 on April