Mather Company purchased equipment on January 1, 2013 at a total invoice cost of $280,000; additional costs of $5,000 for freight and $25,000 for installation were incurred. The equipment has an estimated residual value of $10,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2014 if the straight-line method of depreciation is used is:

Question

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The total cost of the equipment is $310,000 ($280,000 + $5,000 + $25,000). The annual depreciation is ($310,000 - $10,000) / 5 = $60,000. For two years, the accumulated depreciation is $60,000 * 2 = $120,000.

Mather Company Purchased Equipment on January 1, 2013 at a Total