The company has an asset with an original cost of $60,000 purchased on 1/1/06. The asset has a useful life of 5 yrs and is depreciated using the straight line method. As of 6/30/06, what should the balance of the accumulated depreciation account be for

ANSWER

The BIDaWIZ Team's Answer:

If the asset has a useful life of 5 years, and is depreciated using the straight line method, the depreciation expense would be $1,000/mo. (5*12 months = 60 month depreciable life.  $60,000/60 months = $1,000 depreciation per month).

At 6/30/06, 6 months would have passed, so you would have recorded 6 months of depreciation.  Thus, both the depreciation expense and the balance of the accumulated depreciation account would be $6,000.