A company purchased a computer system on January 2,2018 for $1,600,000.The company used the straight-line depreciation method with an estimated useful life of 6 years and a residual value of $130,000.The company prepares financial statements at December 31. Which of the following is correct about the depreciation recorded?
A)Accumulated Depreciation will be debited for $266,667.
B)The book value of the computer system at December 31,2018 will be $1,225,000.
C)Depreciation expense will be debited for $245,000.
D)The depreciable cost of the computer system is $1,600,000.

Question

Quizplus · Accepted Answer

Annual depreciation expense = (Cost − Residual value)× (1 ÷ Useful life)
= ($1,600,000 − $130,000)× (1 ÷ 6)= $245,000
Debit Depreciation Expense and credit Accumulated Depreciation for $245,000
Depreciable cost = Cost − Residual value
= $1,600,000 − $130,000 = $1,470,000
Book value at December 3,2018 = Cost − Accumulated Depreciation
= $1,600,000 − $245,000 = $1,355,000

A Company Purchased a Computer System on January 2,2018 for $1,600,000.The