Question

Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would bea. $90,000b. $75,000c. $65,000d. $25,000

Answer 1

The correct answer is C.

Step-by-step explanation:

Giving the following information:

The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (90,000 - 15,000)/6= 12,500

Accumulated depreciation year 2= 12,500*2= 25,000

Book value= 90,000 - 25,000= 65,000