On January 1,Year 1,Parker Company purchased an asset costing $20,000.The asset had an expected five-year life and a $2,000 salvage value.The company uses the straight-line method.What are the amounts of depreciation expense and accumulated depreciation,respectively,that will be reported in the Year 2 financial statements?
A)$3,600 and $3,600
B)$3,600 and $7,200
C)$4,000 and $12,800
D)$4,000 and $7,200

Question

Quizplus · Accepted Answer

Annual depreciation expense = (Cost of $20,000 - Salvage value of $2,000)÷ 5 years = $3,600
Accumulated depreciation at end of Year 2 = Depreciation expense of $3,600 per year × 2 Years = $7,200

On January 1,Year 1,Parker Company Purchased an Asset Costing $20,000