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3 January, 05:34

Bates Company purchased equipment on January 1, 2006, at a total invoice cost of $600,000. The equipment has an estimated salvage value of $15,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2007, if the straight-line method of depreciation is used? a. $120,000b. $240,000c. $117,000d. $234,000

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  1. 3 January, 06:04
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    d. $234,000

    Explanation:

    The computation of the depreciation expense for one year under the straight line method is shown below:

    = (Original cost - residual value) : (useful life)

    = ($600,000 - $15,000) : (5 years)

    = ($585,000) : (5 years)

    = $117,000

    For two years, the accumulated depreciation would be

    = $117,000 * 2 years

    = $234,000

    The two year is calculated from January 1, 2006 to December 31, 2007
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Home » Business » Bates Company purchased equipment on January 1, 2006, at a total invoice cost of $600,000. The equipment has an estimated salvage value of $15,000 and an estimated useful life of 5 years.
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