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23 August, 05:20

Arc Co. purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000. The salvage value is 0. How much is accumulated depreciation at the end of the period?

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  1. 23 August, 05:27
    0
    Accumulated depreciation is $13,000

    Explanation:

    Net book value = Cost-Accumulated depreciation

    Accumulated depreciation=Cost - Net Book Value

    Cost is $25,000

    Net Book Value is $12,000

    Accumulated depreciation=$25,000-$12,000

    Accumulated depreciation=$13,000

    The accumulated depreciation is usually the cost of an item less net book value at end of a period, the accumulated depreciation is $13,000 till date.

    The salvage value would been useful if we compute depreciation, which can be done since the useful life of the equipment is not given i, e (cost-scrap value) / useful life.
  2. 23 August, 05:39
    0
    The price of the equipment is 25,000 and at the end of the year the book value is 12,000 which means that the equipment has depreciated by 13,000 (25,000-12,000). So at the end of the period the accumulated depreciation is 13,000 because that is how much the equipment has depreciated.
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