A machine purchased on 1 July 2018 cost $100 000 and has a zero estimated salvage value. The useful life of the machine is five years. What is the balance of Accumulated depreciation at 30 June 2020?

Question

Quizplus · Accepted Answer

Depreciation expense per year = (Cost - Salvage Value) / Useful Life 
Depreciation expense per year = ($100,000 - $0) / 5 = $20,000

Accumulated depreciation as of 30 June 2020 (end of year 3) = Depreciation expense per year x Number of years = $20,000 x 3 = $60,000

Therefore, the balance of Accumulated depreciation at 30 June 2020 is $60,000.

A Machine Purchased on 1 July 2018 Cost $100 000