. On January 1, Year One, the Rhode Island Redbirds organization purchased new w
ID: 2598503 • Letter: #
Question
. On January 1, Year One, the Rhode Island Redbirds organization purchased new workout equipment for its athletes. The equipment had a cost of $15,600, transportation costs of $450, and set-up costs of $290. The Redbirds spent an additional $350 training their athletes on the proper use of this equipment. The expected useful life is five years. No residual value is anticipated. How much accumulated depreciation should the Redbirds report after two years if the straight-line method is used?
a. $6,240
b. $6,420
c. $6,536
d. $6,676
Explanation / Answer
So after 2 years, accumulated depreciation is 6536
Correct option is C
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First of all we need to calculate cost of the assert.
Cost of the asset = 15600 + 450 + 290
= 16340
Straight Line method
Annual Depreciation = (Machine cost - salvage value)/ useful years
Annual Depreciation= (16340 - 0)/ 5
= (16340)/ 5
= 3268
Straight Line Depreciation Schedule
Year
Annual Depreciation
Accumulated Depreciation
Book value
1
3268
3268
13072
2
3268
6536
9804
3
3268
9804
6536
4
3268
13072
3268
5
3268
16340
0
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Hope that helps.
Feel free to comment if need further assistance. J
Straight Line Depreciation Schedule
Year
Annual Depreciation
Accumulated Depreciation
Book value
1
3268
3268
13072
2
3268
6536
9804
3
3268
9804
6536
4
3268
13072
3268
5
3268
16340
0
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