Use the following information for questions.
During calendar 2020, Laertes Corp. sold equipment for $ 70,000. The equipment had cost $ 100,000 and had a book value of $ 52,000 at the time of sale. Data from their comparative statements of financial position are: $\begin{array}{lrr}&\operatorname{Dec} 31 / 20&\operatorname{Dec} 31 / 19\
\text { Equipment } & \$ 720,000 & \$ 650,000 \
\text { Accumulated Depreciation } & 210,000 & 190,000
\end{array}$
-Depreciation expense for 2020 was
A) $ 86,000.
B) $ 68,000.
C) $ 18,000.
D) $ 12,000.

Question

Quizplus · Accepted Answer

The depreciation expense for 2020 can be calculated by adjusting the change in accumulated depreciation for the sale of equipment. The accumulated depreciation increased by $20,000 ($210,000 - $190,000). However, since equipment was sold, the book value of which was $52,000 with a cost of $100,000, it means $48,000 of accumulated depreciation related to the sold equipment must be removed from the change in accumulated depreciation. Therefore, the depreciation expense is $20,000 (change in accumulated depreciation) + $48,000 (depreciation on sold equipment) = $68,000.

Use the Following Information for Questions -Depreciation Expense for 2020 Was A) $ 86,000

Use the Following Information for Questions -Depreciation Expense for 2020 Was
A) $ 86,000