Question

Use the following amounts for machinery at the end of year two of its useful life to calculate the amount of accumulated depreciation: Purchase price $ 100,000 Appraised value $ 85,500 Book value $ 80,800 Salvage value $ 4,000

a. $15,200
B. $19,200
c. $20,000
d. $84,800

Answer 1

Accumulated depreciation is calculated as the difference between the purchase price and the book value, which in this case is (B) $19,200.

Step-by-step explanation:

To calculate the accumulated depreciation of machinery at the end of year two, we need to compare the original purchase price and the book value after two years. The purchase price is the initial value of the machinery, and the book value is its current worth considering the depreciation up to this point.

The machinery's initial purchase price was $100,000, and after two years, its book value is $80,800. Accumulated depreciation is the difference between these two amounts. The calculation is as follows:

Purchase Price - Book Value = Accumulated Depreciation

$100,000 - $80,800 = $19,200

Therefore, the accumulated depreciation on the machinery after two years is $19,200.