Question

Benz and Jacobs Accounting purchased a new computer system for $3,500. The total resale value after 5 years is estimated to be $525. Using the straight-line method, Benz and Jacobs determined that the computer system would depreciate $595 per year. What is the salvage value of the system?

Answer 1

3500-5*595=525 salvage value

Answer 2

Answer: The salvage value of the system is $525.

Explanation:

Since we have given that

Cost of a new computer system = $3500

Number of useful life of the asset = 5 years

Annual depreciation expense = $595

So, we need to find the "Salvage value of the system":

According to straight line method, we know the formula :

`Annual\ depreciation=(Cost-Salvage\ value)/(Useful\ life)\\\\\$595=(3500-salvage\ value)/(5)\\\\$595* 5=3500-Salvage\ value\\\\\$2975=\$3500-Salvage\ value\\\\\$3500-\$2975=Salvage\ value\\\\\$525=Salvage\ value`

Hence, The salvage value of the system is $525.