Alabama Company purchased a machine on January 1,2016 for $26,000 cash.The machine has an estimated useful life of 4 years and a $6,000 salvage value.What would be the book (carrying)value of the machine reported on Alabama's December 31,2016 balance sheet?
A)$26,000
B)$19,500
C)$21,000
D)$15,000

Question

Quizplus · Accepted Answer

The annual depreciation expense can be calculated as follows:

(Original cost - Salvage value) / Useful life
= ($26,000 - $6,000) / 4
= $5,000

Therefore, the accumulated depreciation for the year ending December 31, 2016 would be $5,000.

The carrying value of the machine would be:

Original cost - Accumulated depreciation
= $26,000 - $5,000
= $21,000

Therefore, the correct choice is (C)$21,000.

Alabama Company Purchased a Machine on January 1,2016 for $26,000