Final answer:
Using the straight-line depreciation method, the accumulated depreciation of Lomax Enterprises' depreciable asset by December 31, 2010, is $19,166.67, after adjusting for the partial first year of ownership.
Step-by-step explanation:
To calculate the accumulated depreciation on Lomax Enterprises' depreciable asset using the straight-line method, we need to consider the full cost of the asset, its residual value, and the useful life of the asset.
The total depreciable amount is the cost of the asset minus the residual value:
Depreciable amount = $22,000 - $2,000 = $20,000
The yearly depreciation expense is the depreciable amount spread over the useful life of the asset:
Yearly depreciation expense = $20,000 ÷ 4 years = $5,000 per year
However, because the asset was purchased on March 1, 2007, and we need the accumulated depreciation up until December 31, 2010, we are not looking at a full four years. Instead, we're looking at three years and ten months of depreciation. We can prorate the yearly depreciation for the first and last year of the period:
Depreciation for 10 months (Mar-Dec 2007): $5,000 * (10/12) = $4,166.67
Depreciation for the full years (2008, 2009, 2010): $5,000 * 3 = $15,000
Add these together to find the total accumulated depreciation:
Accumulated depreciation = $4,166.67 + $15,000 = $19,166.67
Therefore, option E is the correct answer.