Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life.
-Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 3?

Question

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. 
-Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 3?

Quizplus · Accepted Answer

The annual depreciation expense is calculated as ($22,000 - $2,000) / 4 = $5,000. From April 1, Year 1 to December 31, Year 3 is 2 years and 9 months. For Year 1, depreciation is $5,000 * 9/12 = $3,750. For Year 2 and Year 3, it is $5,000 each year. Thus, accumulated depreciation by December 31, Year 3 is $3,750 + $5,000 + $5,000 = $13,750.

Peavey Enterprises Purchased a Depreciable Asset for $22,000 on April