Cambodian Import Company purchased a depreciable asset for $160,000 on April 1, 2014. The estimated salvage value is $40,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on March 1, 2017 when the asset is sold? (a) $66,000. (b) $70,000. (c) $72,000. (d) $186,667.

Question

Jermaine Dyer

Business

30 January, 15:46

Cambodian Import Company purchased a depreciable asset for $160,000 on April 1, 2014. The estimated salvage value is $40,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on March 1, 2017 when the asset is sold? (a) $66,000. (b) $70,000. (c) $72,000. (d) $186,667.

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Answers (1)

Know the Answer?

Ulises Gutierrez · Answer 1

The correct answer is B.

Explanation:

Giving the following information:

Cambodian Import Company purchased a depreciable asset for $160,000 on April 1, 2014. The estimated salvage value is $40,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation.

Annual depreciation = (original cost - salvage value) / estimated life (years)

Annual depreciation = (160,000 - 40,000) / 5 = 24,000

Accumulated depreciation = 24,000*2 + 24,000/12*11 = $70,000