Question

On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Total Accumulated Depreciation on this machinery at the end of 2010 will be:

Answer 1

$16,667

Step-by-step explanation:

Annual Depreciation = (Original Value - Residual Value) / Useful Life

Annual Depreciation = ($88,000 - $8,000) / 8

Annual Depreciation = $10,000 [Depreciation for 2010 = $10,000]

Depreciation for 2009 = $10000 * 8/12

Depreciation for 2009 = $6,667

Total Accumulated Depreciation = $10,000 + $6,667

Total Accumulated Depreciation = $16,667

So, the total accumulated depreciation on this machinery at the end of 2010 will be $16,667.