Asked by Johnathan Wagner on May 06, 2024
Verified
Sam Moore purchased computer equipment for $6,000 on January 1, 2016. It has a residual value of $300 with a useful life of 4 years. After the appropriate adjusting entries have been made, the balance in Accumulated Depreciation account for this asset on January 1, 2018, under the straight-line method, should be: (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
A) $1,425.
B) $2,850.
C) $4,275.
D) $5,700.
Accumulated Depreciation
The total amount of depreciation expense that has been recorded against an asset since it was put into service.
Straight-line Method
An accounting method for calculating depreciation by evenly distributing the cost of an asset over its useful life.
Residual Value
The estimated remaining value of an asset at the end of its useful life.
- Evaluate the depreciation expense by means of different approaches, such as straight-line, double declining-balance, and units-of-production methodologies.
- Identify the cumulative depreciation and current book value throughout the life cycle of an asset.
Verified Answer
DW
Derek WilsonMay 13, 2024
Final Answer :
B
Explanation :
The straight-line depreciation method spreads the cost of the asset evenly over its useful life. The annual depreciation expense is calculated as (Cost - Residual Value) / Useful Life. For this asset, the annual depreciation is ($6,000 - $300) / 4 = $1,425. By January 1, 2018, two years have passed, so the accumulated depreciation is $1,425 * 2 = $2,850.
Learning Objectives
- Evaluate the depreciation expense by means of different approaches, such as straight-line, double declining-balance, and units-of-production methodologies.
- Identify the cumulative depreciation and current book value throughout the life cycle of an asset.
Related questions
What Would the Depreciation Expense Be in Year 6 for ...
The Depreciation Method That Ignores the Salvage Value Is ________
The Double Declining-Balance Method Is an Accelerated Depreciation Method
The Cost of Equipment Is Expensed ...
To Calculate the Double Declining-Balance Rate, You Would Use Half ...