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Equipment bought 1 May 2011 for $6,000 depreciates $100 per month. It is disposed of on 1 November 2014. What is the Accumulated Depreciation balance on the disposal date?
A$3,600
B$4,800
C$4,200
D$1,800
Answer & Solution
Correct answer: C. $4,200
1. Charge by year: 2011 = 8 months × $100 = $800; 2012 = $1,200; 2013 = $1,200; 2014 (Jan–Nov) = 10 months × $100 = $1,000.
2. Sum: $\$800 + \$1{,}200 + \$1{,}200 + \$1{,}000 = \$4{,}200$.
3. Accumulated Depreciation at 1 Nov 2014 = $4,200.
4. Option D is the carrying amount ($6,000 − $4,200); A omits the disposal-year stub.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.7.1 "Partial-Year Depreciation", p.161_
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