Equipment was purchased for $68,000 on january 1, 2013. freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. it is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. what is the amount of accumulated depreciation at december 31, 2014, if the straight-line method of depreciation is used? a. $26,720.b. $13,360.c. $11,440.d. $22,880.

a. $26,720

Explanation:

Before computing the accumulated depreciation, first we have to compute the original cost of the equipment, after that the depreciation expense. The calculation is shown below:

Original cos t = Equipment purchase cost + freight charges + installment charges

= $68,000 + $2,800 + $8,000

= $78,800

Now the depreciation expense under the straight-line method is shown below:

= (Original cost - residual value) ÷ estimated life in years

= ($78,800 - $12,000) ÷ 5 years

= $13,360

Now the accumulated depreciation is

= Depreciation expense × number of years

= $13,360 × 2 years

= $26,720

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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