On January 1, 2016, ABC, Inc. purchased.A copier for $9,000 cash. Decided to depreciate it over 5 years.

What amounts associated with the copier will appear on ABC's financial statements for the year ending December 31, 2016?

Answer rating: 100% (QA)

To calculate the amounts associated with the copier that will appear on ABC Incs financial statements for the year ending December 31 2016 we need to consider depreciation Depreciation is the process of allocating the cost of a tangible asset like the copier over its useful life In this case ABC Inc has decided to depreciate the copier over 5 years There are different methods of depreciation but for simplicity lets assume they are using the straightline depreciation method Straightline depreciation allocates an equal amount of the assets cost to each year of its useful life Step 1 Calculate the annual depreciation expense Annual Depreciation Expense Cost of the copier Salvage value Useful life Since there is no mention of a salvage value the estimated value of the copier at the end of its useful life and assuming it has no residual value we can consider the salvage value as 0 Annual Depreciation Expense 9000 0 5 years 1800 per year Step 2 Determine the amounts associated with the copier for the year ending December 31 2016 Since the copier was purchased on January 1 2016 the depreciation expense for the year 2016 will be applicable for the period from January 1 2016 to December 31 2016 Amounts associated with the copier for the year ending December 31 2016 1 Depreciation Expense 1800 as calculated above 2 Accumulated Depreciation 1800 since its the first year the accumulated depreciation will be equal to the depreciation expense for the year On ABC Incs income statement ... View the full answer