On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.Ace Electronics uses the straight-line method to depreciate its assets.At December 31,2013,Ace will have accumulated depreciation of ________.

Question

Quizplus · Accepted Answer

The straight-line depreciation method spreads the cost of the asset evenly over its useful life. The annual depreciation expense is $400,000 / 5 years = $80,000. By December 31, 2013, three years of depreciation will have accumulated: 3 years * $80,000/year = $240,000.

On January 1,2011,Ace Electronics Paid $400,000 Cash for a Computer