Equipment was purchased for $51,000 on January 1, 2013. Freight charges amounted to $2,100 and there was a cost of $6,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $9,000 residual value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2014, if the straight-line method of depreciation is used?

Question

Quizplus · Accepted Answer

The total cost of the equipment is $51,000 + $2,100 + $6,000 = $59,100. The depreciable amount is $59,100 - $9,000 = $50,100. Using the straight-line method over 5 years, annual depreciation is $50,100 / 5 = $10,020. For two years (2013 and 2014), accumulated depreciation is $10,020 * 2 = $20,040.

Equipment Was Purchased for $51,000 on January 1, 2013