Emir Company purchased equipment that cost $110,000 cash on January 1, Year 1. T
ID: 2571061 • Letter: E
Question
Emir Company purchased equipment that cost $110,000 cash on January 1, Year 1. The equipment had an expected useful life of six years and an estimated salvage value of $8,000. Assuming that Emir depreciates its assets under the straight-line method, the amount of depreciation expense appearing on the Year 4 income statement and the amount of accumulated depreciation appearing on the December 31, Year 4, balance sheet would be:
Multiple Choice
Option A
Option B
Option C
Option D
Depreciation expense Accumulated depreciation A. $ 17,000 $ 17,000 B. $ 17,000 $ 68,000 C. $ 68,000 $ 17,000 D. $ 17,000 $ 51,000Explanation / Answer
Straight Line method
Annual Depreciation = (Machine cost - salvage value)/ useful years
Annual Depreciation= (110000 - 8000)/ 6
= (102000)/ 6
= 17000
Pls refer the below table for depreciation schedule
Straight Line Depreciation Schedule
Year
Annual Depreciation
Accumulated Depreciation
Book value
1
17000
17000
93000
2
17000
34000
76000
3
17000
51000
59000
4
17000
68000
42000
Depreciation Expense in year 4 will be 17000, while accumulated depreciation will be 68000
Correct answer is B.
Straight Line Depreciation Schedule
Year
Annual Depreciation
Accumulated Depreciation
Book value
1
17000
17000
93000
2
17000
34000
76000
3
17000
51000
59000
4
17000
68000
42000
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