Machinery was purchased for $170,000 on January 1, 2013. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $30,000 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 correct answer is A.The total cost of the machinery is $170,000 + $7,000 + $20,000 = $197,000. The annual depreciation expense is ($197,000 - $30,000) / 5 = $33,400. The accumulated depreciation at December 31, 2014 is $33,400 x 2 = $66,800.

Machinery Was Purchased for $170,000 on January 1, 2013