Sam Moore purchased computer equipment for $6,000 on January 1, 2016. It has a residual value of $300 with a useful life of 4 years. After the appropriate adjusting entries have been made, the balance in Accumulated Depreciation account for this asset on January 1, 2018, under the straight-line method, should be: (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The straight-line depreciation method spreads the cost of the asset evenly over its useful life. The annual depreciation expense is calculated as (Cost - Residual Value) / Useful Life. For this asset, the annual depreciation is ($6,000 - $300) / 4 = $1,425. By January 1, 2018, two years have passed, so the accumulated depreciation is $1,425 * 2 = $2,850.

Sam Moore Purchased Computer Equipment for $6,000 on January 1