Rhoundakona Corporation bought property, plant, and equipment on January 1, 2012, at a cost of $35,000. Estimated residual value is $5,000 and the estimated useful life is 8 years. The company uses straight-line depreciation. On January 1, 2015, Rhoundakona's management sells the asset for $25,000. The balance in Accumulated Depreciation on January 1, 2015, is:

Question

Quizplus · Accepted Answer

The annual depreciation expense is ($35,000 - $5,000) / 8 = $3,750. By January 1, 2015, 3 years of depreciation have been recorded, so the accumulated depreciation is 3 * $3,750 = $11,250.

Rhoundakona Corporation Bought Property, Plant, and Equipment on January 1