On January 1, Year 1 Marrow Moving Company paid $35,000 to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marrow uses the straight-line method, the amount of accumulated depreciation shown on the Year 2 balance sheet is

Question

Quizplus · Accepted Answer

Using straight-line method, the annual depreciation expense is calculated as follows:

Depreciable cost = ($35,000 - $8,000) = $27,000

Annual depreciation expense = Depreciable cost / Useful life = $27,000 / 4 years = $6,750

Thus, the accumulated depreciation at the end of Year 2 (assuming zero salvage value) would be:

Accumulated depreciation = Annual depreciation expense x Number of years = $6,750 x 2 = $13,500

Therefore, the correct answer is B) $13,500.

On January 1, Year 1 Marrow Moving Company Paid $35,000