The cost of the two-year-old machine is $210,000. It has an estimated residual value of $40,000, and has an estimated useful life of four years. The company uses straight-line depreciation.

The cost of the two-year-old machine is $210,000. It has an estimated residual value of $40,000, and has an estimated useful life of four years. The company uses straight-line depreciation.

Required:

Calculate the book value of the machine at the end of second year. (Omit the "$" sign in your response.)

 

Book value

$

 

Explanation:  

Machinery (original cost)	$	210,000
Accumulated depreciation at end of year 2
Depreciation expense = ($210,000 cost – $40,000 residual value) ×       1/4 years = $42,500
Accumulated depreciation = $42,500 annual depreciation expense × 2 yrs =		85,000
Book value at the end of the second year	$	125,000