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On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the...

On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400. In its financial statements, Shoreham uses straight-line depreciation. The ending balance of accumulated depreciation at December 31, 2017, will be:

$15,200

$7,200

$7,600

$14,400
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Answer #1
Answer : $14,400

Calculation:

Straight line method depreciation expense = (Cost of an asset - Residual value) / Useful life

Cost of an asset = $45,600

Residual value = $2,400

Useful Life = 6 years

Depreciation expense for the year 2016 = ($45,600 - $2,400) / 6 years = $7,200

Depreciation expense for the year 2017 = ($45,600 - $2,400) / 6 years = $7,200

Accumulated depreciation at December 31, 3017 = $7,200 + $7,200 = $14,400

All the best...

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