The Lowell Merchandising Corporation purchased $240,000 of display equipment on

Question

The Lowell Merchandising Corporation purchased $240,000 of display equipment on January 1, 2009. The equipment was expected to have a six year useful life, after which it could be sold for $18,000.
For the year ended December 31, 2009, the Lowell Merchandising Corporation reported display equipment depreciation expense of $40,000. For the year ended December 31, 2010, the Lowell Merchandising Corporation reported display equipment depreciation expense of $30,000.

Calculate the dollar amount the Lowell Merchandising Corporation would report in its accumulated depreciation, display equipment account on December 31, 2009.




a. $240,000

b. $222,000

c. $70,000

d. $40,000

e. $18,000

Explanation / Answer

c. 70,000. 40,000 from 2009 plus 30,000 from 2010 equal 70,000. The equipment account will have 240,000 in it. The accumulated depreciation will have 70,000 in it, and the book value of the equipment will be the difference.

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