Compatibility Services acquired an $80,000 machine on January 1,20X3.The machine is estimated to have a useful life of 8 years,and a residual value of $4,000.For units-of-production depreciation purposes,the machine is expected to produce 400,000 units.If Compatibility Services uses straight-line depreciation,what is the balance in the accumulated depreciation account on January 1,20X5?
A)$19,000
B)$20,000
C)$28,500
D)$21,600
E)$30,000

Question

Quizplus · Accepted Answer

Straight-line depreciation expense is calculated as (Cost - Residual Value) / Useful Life. In this case, the straight-line depreciation expense is ($80,000 - $4,000) / 8 = $9,500 per year. The balance in the accumulated depreciation account on January 1, 20X5, after 2 years of depreciation, is $9,500 * 2 = $19,000.

Compatibility Services Acquired an $80,000 Machine on January 1,20X3