Question

fontaine ltd. acquired a machine for $600,000 on january 1, 2022. the machine has a salvage value of $10,000 and a five-year useful life. fontaine expects the machine to run for 15,000 machine-hours. the machine was actually used for 4,800 hours in 2022 and 3,150 hours in 2023. what would be the balance in the accumulated depreciation account at december 31, 2023, if the straight-line method were used?

Answer 1

To calculate the balance in the accumulated depreciation account at December 31, 2023, using the straight-line method, you need to find the annual depreciation expense and add it up for each year. The annual depreciation expense can be calculated using the formula (Cost - Salvage Value) / Useful Life.

Step-by-step explanation:

To calculate the accumulated depreciation using the straight-line method, we need to determine the annual depreciation expense. The formula to calculate annual depreciation is:

Depreciation Expense = (Cost - Salvage Value) / Useful Life

In this case, the cost is $600,000, the salvage value is $10,000, and the useful life is 5 years. Therefore, the annual depreciation expense is:

Depreciation Expense = ($600,000 - $10,000) / 5 = $118,000

To find the accumulated depreciation at December 31, 2023, we need to sum up the depreciation expenses for each year from 2022 to 2023. :

Accumulated Depreciation at December 31, 2023 = Depreciation Expense in 2022 + Depreciation Expense in 2023

Using the formula above, we can calculate the accumulated depreciation at the end of 2023.