Question:
On January 1, year 1, Marino moving company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of accumulated depreciation shown on the year 2 balance sheet is
Answer:
Depreciation = Purchase Cost – Salvage Value
= $48,000 – $8,000
= $40,000
Accumulated depreciation = Depreciation * Years
= $40,000 * 2/4 Years
= $20,000
The amount of accumulated depreciation shown on the year 2 balance sheet is $20,000
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