Baker Corporation's accumulated depreciation - equipment account balance was $58,000 as of 12/31/16 and $60,000 as of 12/31/17. Equipment with a cost of $30,000 and accumulated depreciation of $10,000 was sold during the year. Based on this information, what depreciation expense amount will be added to net income in the operating activities section of the statement of cash flows? Select one: a. $14,000 b. $10,000 c. $12,000 d. $2,000

Question

Molly Holloway

Business

18 August, 14:14

Baker Corporation's accumulated depreciation - equipment account balance was $58,000 as of 12/31/16 and $60,000 as of 12/31/17. Equipment with a cost of $30,000 and accumulated depreciation of $10,000 was sold during the year. Based on this information, what depreciation expense amount will be added to net income in the operating activities section of the statement of cash flows? Select one: a. $14,000 b. $10,000 c. $12,000 d. $2,000

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Leonardo Fritz · Answer 1

d. $2,000

Explanation:

Accumulated Depreciation means the total depreciation expense over the years.

As it is shown that the Depreciation expense is only of $ 2,000

= Accumulated Depreciation of 12/31/17 Less Accumulated Depreciation 12/31/16 = 60,000 - 58,000 = $ 2000

The Change in Accumulated Depreciation between the two years will be added in the net income in the operating activities section of the statement of cash flows.