Question

Seven Kingdoms Sundries, Inc. has furniture and fixtures in its retail store with a cost of $150,000 and an estimated salvage value of $10,000. Using the straight-line method of depreciation, annual depreciation is computed as $20,000. What are the amounts of accumulated depreciation and book value, respectively, that Seven Kingdoms Sundries should report for the furniture and fixtures as of the end of the third year?

		$20,000; $130,000
		$60,000; $90,000
		$60,000; $80,000
		$30,000; $120,000

Answer 1

Cost of furniture and fixtures = $150,000

Annual depreciation expense =$20,000

Accumulated depreciation expense at the end of third year = Annual depreciation expense x 3

= 20,000 x 3

= $60,000

Book value of  furniture and fixtures at the end of third year = Cost of furniture and fixtures- Accumulated depreciation expense at the end of third year

= 150,000-60,000

= $90,000

the amounts of accumulated depreciation and book value, respectively, that Seven Kingdoms Sundries should report for the furniture and fixtures as of the end of the third year is $60,000; $90,000.

Second option is correct.

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