Biglersville Corp.purchased equipment at the beginning of 2016 for $16,000.Biglersville Corp.decided to depreciate the equipment over a 5-year period using the straight-line method.Biglersville Corp.estimated the equipment's residual value at $1,000.The estimated fair market value at the end of 2016 was $15,000.Which of the following statements is correct concerning Biglersville Corp.'s financial statements at December 31, 2016?

Question

Quizplus · Accepted Answer

The equipment was depreciated for one year using the straight-line method, which means that the annual depreciation expense is ($16,000-$1,000)/5 = $3,000.
The accumulated depreciation for one year is $3,000.
The book value of the equipment at the end of 2016 is $16,000 - $3,000 = $13,000.
Therefore, option B is correct. Options A, C, and D are incorrect.