The cost of the two-year-old
machine is $220,000. It has an estimated residual value of $30,000, and has
an estimated useful life of four years. The company uses straight-line
depreciation.
|
Required:
|
Calculate the book value of the
machine at the end of second year. (Omit the
"$" sign in your response.)
|
Book value
|
$
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Explanation:
|
|
|
Machinery (original
cost)
|
$
|
220,000
|
Accumulated
depreciation at end of year 2
|
|
|
Depreciation
expense = ($220,000 cost – $30,000 residual value) ×
1/4 years = $47,500 |
|
|
Accumulated
depreciation = $47,500 annual depreciation expense × 2 yrs =
|
|
95,000
|
|
|
|
Book value at the end
of the second year
|
$
|
125,000
|
|
|
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