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:

Depreciation expense Accumulated depreciation
A. $ 17,000 $ 17,000
B. $ 17,000 $ 68,000
C. $ 68,000 $ 17,000
D. $ 17,000 $ 51,000
Multiple Choice

Option A

Option B

Option C

Option D

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

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.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (110,000 - 8,000)/6= 17,000

Year 4:

Depreciation= 17,000

Accumulated depreciation= 17,000*4= 68,000