Oregona Ltd. owns a machine that it purchased on Jan 1, 2010 for $750,000. The machine had an estimated useful life of 5 years and an estimated residual value of $50,000. The company uses straight-line depreciation and records monthly depreciation. The machine was sold on December 31, 2013 for $200,000. What is the accumulated depreciation at December 31, 2013?

Question

Quizplus · Accepted Answer

Annual depreciation = (Cost - Residual value) / Useful life = ($750,000 - $50,000) / 5 = $140,000
Monthly depreciation = $140,000 / 12 = $11,667
Accumulated depreciation at December 31, 2013 = ($11,667 x 48) = $560,016. Therefore, the best choice is B) $560,000 as it is the closest option.