Machinery was purchased for $480000 on January 1, 2022. Freight charges amounted to $13000 and there...

Machinery was purchased for $480000 on January 1, 2022. Freight charges amounted to $13000 and there was a cost of $38000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $65000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2023 if the straight-line method of depreciation is used?

A.$186400.

B.$93200.

C.$85800.

D.$171600.

Solutions

Expert Solution

Answer: A) $186,400

Explanation:

Depreciation under Straight line Method= (Cost of Asset - Salvage value) / Estimated useful life

Given,

Salvage Value = $65,000

Estimated Useful life= 5 years

Purchase Price= $480,000

Freight charges= $13,000

Installation cost = $38,000

Cost of Asset includes all the cost incurred for the purpose of making the asset ready for its intended use. It includes purchase price, transportation cost, installation cost, commission etc.

Therefore, In the given case, Cost of Asset = Purchase Price + Freight charges + Installation cost

= 480,000 + 13,000 + 38,000

= $531,000

Depreciation under Straight Line Method = (Cost of Asset - Salvage value) / Estimated useful life

= (531,000 - 65,000) / 5 years

= 466,000 / 5

= $93,200 per year

Number of Years completed as on December 31,2023 (Jan 1,2022 to Dec 31,2023)= 2 Years

Therefore, Accumulated Depreciation = Annual depreciation* Number of years completed

= 93,200 * 2 years

= $186,400

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Question 92 Equipment was purchased for $82400 on January 1, 2016. Freight charges amounted to $3200...

Question 92 Equipment was purchased for $82400 on January 1, 2016. Freight charges amounted to $3200 and there was a cost of $12000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $16000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used? Question 111 A plant asset was purchased on January 1...

Monty Corporation purchased machinery on January 1, 2022, at a cost of $270,000. The estimated useful...

Monty Corporation purchased machinery on January 1, 2022, at a cost of $270,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $32,000. The company is considering different depreciation methods that could be used for financial reporting purposes. (a) Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate. STRAIGHT-LINE DEPRECIATION Computation End of Year Years Depreciable...

Indigo Corporation purchased machinery on January 1, 2022, at a cost of $292,000. The estimated useful...

Indigo Corporation purchased machinery on January 1, 2022, at a cost of $292,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $34,200. The company is considering different depreciation methods that could be used for financial reporting purposes. Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate. STRAIGHT-LINE DEPRECIATION Computation End of Year Years Depreciable Cost...

Shamrock Company purchased machinery on January 1, 2017, for $ 97,600. The machinery is estimated to...

Shamrock Company purchased machinery on January 1, 2017, for $ 97,600. The machinery is estimated to have a salvage value of $ 9,760 after a useful life of 8 years. 1. Compute 2017 depreciation expense using the sum-of-the-years'-digits method. 2.Compute 2017 depreciation expense using the sum-of-the-years'-digits method, assuming the machinery was purchased on April 1, 2017.

Whispering Company purchased machinery for $165,900 on January 1, 2017. It is estimated that the machinery...

Whispering Company purchased machinery for $165,900 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14,700, production of 91,100 units, and working hours of 46,100. During 2017, the company uses the machinery for 13,369 hours, and the machinery produces 12,754 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years’-digits, and double-declining-balance methods. (Round intermediate calculations to 5 decimal places, e.g. 1.56487 and final answers to 0 decimal...

Metlock Company purchased machinery on January 1, 2020, for $88,000. The machinery is estimated to have...

Metlock Company purchased machinery on January 1, 2020, for $88,000. The machinery is estimated to have a salvage value of $8,800 after a useful life of 8 years. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Compute 2020 depreciation expense using the double-declining-balance method. Depreciation expense $enter Depreciation expense in dollars eTextbook and Media New attempt is in progress. Some of the new entries may impact the...

heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have...

heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have a salvage value of $9,360 after a useful life of 8 years. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Compute 2020 depreciation expense using the sum-of-the-years'-digits method. Depreciation expense $enter Depreciation expense in dollars eTextbook and Media New attempt is in progress. Some of the new entries may impact the...

Kingbird Company purchased machinery on January 1, 2017 for $99200. The machinery is estimated to have...

Kingbird Company purchased machinery on January 1, 2017 for $99200. The machinery is estimated to have a salvage value of $9,920 after a useful life of 8 years. A. Compute the 2017 depreciation expense using double-declining balance method. B. Compute 2017 depreciation expense using the double-declining-balance method, assuming the machinery was purchased on October 1, 2017.

Bonita Company purchased machinery on January 1, 2020, for $87,200. The machinery is estimated to have...

Bonita Company purchased machinery on January 1, 2020, for $87,200. The machinery is estimated to have a salvage value of $8,720 after a useful life of 8 years. Compute 2020 depreciation expense using the double-declining-balance method. Compute 2020 depreciation expense using the double-declining-method method assuming the machinery was purchased on September 1, 2020.

Phillips Machinery Corporation purchased machinery for cash of $60,000 on January 1, 2014. The machine has...

Phillips Machinery Corporation purchased machinery for cash of $60,000 on January 1, 2014. The machine has an estimated useful life of 5 years and will be depreciated using the straight-line method with no salvage value. The machine was then leased to Roadway Company an 80% owned subsidiary under a 5-year operating lease for $15,000 per year, payable January 1, every year. Required 1. Record the 2014 entries for the purchase of the machine and the lease to Roadway Company on...

Subjects