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.

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

$

 

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