Question

Exacta Manufacturing purchased manufacturing supplies for $4100. The manufacturing supplies have an estimated useful life of 7 years and a residual value of $300. Using the straight-line method of depreciation, calculate the following. (If necessary, round your answer to the nearest cent.) a) Depreciation expense for year 1. b) Book value at the end of year 1.

Answer 1

Answer:

Depreciation expense year 1: $ 542.86
Book value at the end of year 1: 3,557.14


Step-by-step explanation:

1) Depreciation = [purchase price - residual value] / [useful life]

2) Depreciation = [$ 4100 - $ 300] / [7 years] = $ 542.86 / year


That is the depreciation expense after year 1.

3) The book value will be the purchasing value less the depreciation accumulated, which is that of one year: $ 4100 - $ 542.86 = $ 3,557.14