Equipment was purchased for $68,000 on January 1, 2013. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage 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 $68,000 + $2,800 + $8,000 = $78,800. The depreciable amount is $78,800 - $12,000 = $66,800. Using the straight-line method over 5 years, annual depreciation is $66,800 / 5 = $13,360. Accumulated depreciation for 2 years (2013 and 2014) is $13,360 * 2 = $26,720.

Equipment Was Purchased for $68,000 on January 1, 2013