A machine has a cost of $15,000, an estimated residual value of $3,000, and an estimated useful life of four years. The machine is being depreciated on a straight-line basis. At the end of the second year, what amount will be reported for accumulated depreciation?.

Long-term assets are used up gradually over their lives and this use needs to be expensed under the matching principle in the GAAP (Generally Accepted Accounting Principles). The way this is done is by using a method of depreciation to approximate the expense.

Formula :

Accumulated Depreciation = [tex]\frac{ Cost of Assets - Salvage/ Residual Value}{Life of the asset}[/tex] × [tex]No. of Year[/tex]

Given:

Asset Cost = $15,000

Residual Value = $3,000

No. Of Year= 2

SOLUTION-

We find the amount in accumulated depreciation by finding the depreciable value:

Depreciable Value = Asset Cost - Residual Value

Depreciable Value = $15,000 - $3,000

Depreciable Value = $12,000

Now, let's divide this by 2 to find the amount in accumulated depreciation at the end of the second year:

Accumulated Depreciation =$12,000 / 2 = $6,000

Hence, The amount in accumulated depreciation at the end of the second year is $6,000.

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