Answer:
c. $420,000
Explanation:
The purchase date was 1 January 2013 and the machine was expensed out rather than being recorded as an asset.
So the depreciation and allowance for depreciation was not recorded for 3 years starting from Jan 2013-Dec 2015.
Annual Depreciation using straight line depreciation: $700,000 ÷ 5 = $140,000 per annum.
3 years allowance for depreciation = $140,000 × 3 = $420,000
Answer:
c. $420,000
Explanation:
Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.
It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset .
To record depreciation, debit depreciation expense and credit accumulated depreciation.
These are the entries that have been omitted between 2013 and 2016 (3 years)
Annual depreciation = $700,000/5 = $140,000
For 3 years, accumulated depreciation
= 3 * $140,000
= $420,000
This will be credited to accumulated depreciation.
