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Rolling Stones purchases equipment with a cost of 100,000, an estimated residual value of 10,000, and...

Rolling Stones purchases equipment with a cost of 100,000, an estimated residual value of 10,000, and an estimated useful life of 10 years on July 1, 2020. If the company uses straight-line depreciation and has a December 31 year end, what is the accumulated depreciation on December 31, 2021?

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Answer #1

Answer:
Cost of Equipment = $100,000
Residual Value = $10,000
Useful Life = 10 years

Straight Line Depreciation per year = (Cost – Residual Value) / Useful Life
Straight Line Depreciation per year = ($100,000 - $10,000) / 10
Straight Line Depreciation per year = $9,000

Depreciation for the year ended December 31, 2020 = $9,000 * 6/12
Depreciation for the year ended December 31, 2020 = $4,500

Depreciation for the year ended December 31, 2021 = $9,000

Accumulated Depreciation, December 31, 2021 = $4,500 + $9,000
Accumulated Depreciation, December 31, 2021 = $13,500   

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