Question

Arc Co. purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000. The salvage value is 0. How much is accumulated depreciation at the end of the period?

Answer 1

Accumulated depreciation is $13,000

Step-by-step explanation:

Net book value =Cost-Accumulated depreciation

Accumulated depreciation=Cost -Net Book Value

Cost is $25,000

Net Book Value is $12,000

Accumulated depreciation=$25,000-$12,000

Accumulated depreciation=$13,000

The accumulated depreciation is usually the cost of an item less net book value at end of a period,the accumulated depreciation is $13,000 till date.

The salvage value would been useful if we compute depreciation, which can be done since the useful life of the equipment is not given i,e (cost-scrap value)/useful life.

Answer 2

The price of the equipment is 25,000 and at the end of the year the book value is 12,000 which means that the equipment has depreciated by 13,000 (25,000-12,000). So at the end of the period the accumulated depreciation is 13,000 because that is how much the equipment has depreciated.

Step-by-step explanation: