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Swifty Corporation purchased a depreciable asset for $710000 on April 1, 2015. The estimated salvage value...

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Accounting

Swifty Corporation purchased a depreciable asset for $710000 onApril 1, 2015. The estimated salvage value is $71000, and theestimated useful life is 5 years. The straight-line method is usedfor depreciation. What is the balance in accumulated depreciationon May 1, 2018 when the asset is sold?

$299550
$352050
$394050
$257550

Answer & Explanation Solved by verified expert
3.8 Ratings (485 Votes)

Correct answer---------$394,050

Working

Straight line Method
A Cost $ 710,000
B Residual Value $ 71,000
C=A - B Depreciable base $ 639,000
D Life [in years left ]                                  5
E=C/D Annual SLM depreciation $           127,800.00

.

Depreciation schedule-Straight line method
Year Book Value Depreciation expense Accumulated Depreciation Ending Book Value
2015 for only 9 months $        710,000.00 $             95,850.00 $             95,850.00 $            614,150.00
2016 $        614,150.00 $           127,800.00 $           223,650.00 $            486,350.00
2017 $        486,350.00 $           127,800.00 $           351,450.00 $            358,550.00
2018 for only 4 months $        358,550.00 $             42,600.00 $           394,050.00 $            315,950.00

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