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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Refer to the information for Cox Inc. above. What would be the balance in the accumulated depreciation account at December 31, 2020, if the straight-line method were used?

a. $156,000

b. $160, 000

c. $312, 000

d. $328, 000

To determine

Depreciation:

The depreciation is the expense which is debited to the income statement in the ratio of the period of the respective asset.

Accumulated Depreciation:

The accumulated depreciation is the account which is created to record the depreciation expense from the asset purchase time till the disposal time.

To select:

The correct balance in the accumulated depreciation account at December 31,2020.

Explanation

The Cox Inc. acquired a machine with the following information:

Purchase Cost=$8,00,000Residual Value=$20,000Life of Asset=5 years

The depreciation expense per year is as follows:

Deprecitaion=Cost of assetResidual valueLife of asset=$8,00,000$

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