Walker Company purchased a truck on May 31,2011 for $70,000.The equipment has an estimated useful life of five years.What amount will appear on Walker Company's balance sheet for total accumulated depreciation at May 31,2014?

Question

Quizplus · Accepted Answer

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

Annual depreciation expense = (Cost of equipment - Salvage value) / Useful life

In this case, we don't know the salvage value, so we assume it to be zero.

Annual depreciation expense = ($70,000 - $0) / 5 = $14,000

To find the accumulated depreciation at May 31, 2014 (i.e. after 3 years of use), we multiply the annual depreciation expense by the number of years of use:

Accumulated depreciation = 3 years x $14,000 per year = $42,000.

Therefore, the correct answer is C.

Walker Company Purchased a Truck on May 31,2011 for $70,000