Drago Company purchased equipment on January 1, 2015, at a total invoice cost of $1,200,000. The equipment has an estimated salvage value of $30,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2016, if the straight-line method of depreciation is used?

Question

Quizplus · Accepted Answer

Annual depreciation = (Cost - Salvage value) / Useful life = ($1,200,000 - $30,000) / 5 = $234,000
Accumulated depreciation at December 31, 2016 (two years of depreciation) = 2 x $234,000 = $468,000. Therefore, the correct answer is D.

Drago Company Purchased Equipment on January 1, 2015, at a Total