Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's residual value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 4?

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Quizplus · Accepted Answer

The annual depreciation is ($22,000 - $2,000) / 4 = $5,000. Since the asset was purchased on March 1, Year 1, it will be depreciated for 3 years and 10 months by December 31, Year 4. The accumulated depreciation is $5,000 * 3 + ($5,000 * 10/12) = $19,166.67.

Lomax Enterprises Purchased a Depreciable Asset for $22,000 on March