Question
In: Accounting
Swifty Corporation purchased a depreciable asset for $710000 on April 1, 2015. The estimated salvage value...
Swifty Corporation purchased a depreciable asset for $710000 on April 1, 2015. The estimated salvage value is $71000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on May 1, 2018 when the asset is sold?
| $299550 |
| $352050 |
| $394050 |
| $257550 |
Solutions
Expert Solution
Correct answer---------$394,050
Working
| Straight line Method | ||
| A | Cost | $ 710,000 |
| B | Residual Value | $ 71,000 |
| C=A - B | Depreciable base | $ 639,000 |
| D | Life [in years left ] | 5 |
| E=C/D | Annual SLM depreciation | $ 127,800.00 |
.
| Depreciation schedule-Straight line method | ||||
| Year | Book Value | Depreciation expense | Accumulated Depreciation | Ending Book Value |
| 2015 for only 9 months | $ 710,000.00 | $ 95,850.00 | $ 95,850.00 | $ 614,150.00 |
| 2016 | $ 614,150.00 | $ 127,800.00 | $ 223,650.00 | $ 486,350.00 |
| 2017 | $ 486,350.00 | $ 127,800.00 | $ 351,450.00 | $ 358,550.00 |
| 2018 for only 4 months | $ 358,550.00 | $ 42,600.00 | $ 394,050.00 | $ 315,950.00 |
ekkarill92 answered 1 year agoRelated Solutions
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