Oregona Ltd. owns a machine that it purchased on Jan 1, 2019 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, 2022 for $200,000. What is the accumulated depreciation at December 31, 2022?

Question

Quizplus · Accepted Answer

The annual depreciation is calculated as follows: 
($750,000 - $50,000) / 5 = $140,000
Monthly depreciation is $140,000 / 12 = $11,667
From January 1, 2019 to December 31, 2022, the accumulated depreciation will be:
48 months x $11,667 = $560,016
Since the company uses straight-line depreciation, the accumulated depreciation on December 31, 2022 will be $560,000 (rounded to the nearest thousand). Therefore, the correct answer is B.