Answer:
Accumulated depreciation= $33,400
Explanation:
We have to take into account that the total purchasing price of the equipment is formed by the purchasing price per se, and all necessary cost until it is ready to function.
Purchasing price= 85,000 + 3,500 + 10,000= $98,500
It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life.
To determine the accumulated depreciation at the end of 2017, first, we need to calculate the annual depreciation using the straight-line method.
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (98,500 - 15,000)/5= $16,700
Accumulated depreciation= 16,700*2= $33,400
