Question

A company purchased office equipment for $130,000 on March 1, 2021. The estimated service life is four years with a $40,000 residual value. The company records partial-year depreciation based on the number of months in service. The balance of accumulated depreciation for the year ended December 31, 2022, using straight-line depreciation, is:

Answer 1

$22,500

Step-by-step explanation:

Data provided as per the question

Value of machinery = $130,000

Residual value = 40,000

Life of the machinery = 4 years

The computation of balance of accumulated depreciation is shown below:-

= Value of machinery - Residual value ÷ Life of machinery

= $130,000 - $40,000 ÷ 4

= $22,500

Here, we are considering full depreciation as we can see there are 12 months from March 1, 2021 to December 31, 2022.