On November 1,2011,Frigate Shipping Company bought equipment that cost $400,000,with an estimated useful life of 8 years and an estimated salvage value of $28,000.The company uses the straight-line method of depreciation and has a fiscal year ending on October 31.At October 31,2013,Frigate Company will report accumulated depreciation of ________.

Question

Quizplus · Accepted Answer

To calculate the accumulated depreciation, we need to know the annual depreciation expense first.

Annual depreciation expense = (cost - salvage value) / useful life

= ($400,000 - $28,000) / 8

= $47,250

Since the company uses the straight-line method of depreciation, the annual depreciation expense is the same for each year.

To find the accumulated depreciation for 2013, we need to know how many years have passed since the equipment was purchased.

From November 1, 2011, to October 31, 2013, Frigate Shipping Company has used the equipment for 2 years (2011-2012 and 2012-2013).

Accumulated depreciation = annual depreciation expense x number of years

= $47,250 x 2

= $93,500

Therefore, the correct answer is C) $93,000.

On November 1,2011,Frigate Shipping Company Bought Equipment That Cost $400,000,with