Linh Do Accounting Services. purchased equipment at a cost of $100 000 in January 2020. As of 1 July 2025, depreciation of $45 000 had been recorded on this asset. Depreciation expense for the 2025/26 financial year is $5 000. After the adjustments are recorded and posted at 30 June 2026, what are the balances for the depreciation expense and accumulated depreciation?

Question

BlackTom AI · Accepted Answer

First, restating the scenario helps set the stage: an asset cost 100,000 with accumulated depreciation of 45,000 as of 1 July 2025, and the depreciation expense for the 2025/26 year is 5,000. The question asks for the balances after recording the adjustments at 30 June 2026.

Option A: Depreciation expense: 5,000, Accumulated depreciation: 50,000. This matches the given 5,000 depreciation for the year added to the existing accumulated depreciation of 45,000, giving 50,000. It correctly reflects the year’s expense and the cumulative depreciation.

Option B: Depreciation expense: 45,000, Accumulated depreciation: 45,000. Here, the depreciation expense is incorrectly stated as 45,000 for the year; the problem clearly indicates the 2025/26 depreciation expense is 5,000. Additionally, accumulated depreciation would not remain at 45,000 if 5,000 more is recognized.

Option C: Depreciation expense: 5,000, Accumulated depreciation: 45,000. This option records the correct current-year expense amount, but fails to increase the accumulated depreciation by that 5,000 for the year. As a result, accumulated depreciation would be understated at 45,000 instead of 50,000.

Option D: Depreciation expense: 45,000, Accumulated depreciation: 50,000. The 45,000 depreciation expense for the year is incorrect; the problem specifies 5,000 for 2025/26. Meanwhile, accumulated depreciation of 50,000 is correct if you add 5,000 to the prior 45,000, so the expense amount makes this option inconsistent.

In summary, the only option that aligns with the provided annual depreciation of 5,000 and properly increases the accumulated depreciation from 45,000 to 50,000 is Option A. The other options misstate either the current-year expense, the accumulated balance, or both.

BACC012 Week 4: Practice Quiz

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