Question

hi how can i solve this problem?An automobile purchased for use by the manager of a firm at a price of $34,000 is to be depreciated by using the straight-line method over 5 years. What will be the book value of the automobile at the end of 3 years? (Assume that the scrap value is $0.)

Answer 1

Given:

An automobile purchased firm at a price of $34000

Price is to be depreciated by using the straight-line method over 5 years.

`\begin{gathered} \text{Amount of depreciation per year=}(34000)/(5) \\ \text{Amount of depreciation per year= \$6800} \end{gathered}`
`\begin{gathered} \text{Book value of the automobil at the end of 3 years=34000-3(6800)} \\ \text{Book value of the automobil at the end of 3 years=}34000-20400 \\ \text{Book value of the automobil at the end of 3 years= \$13600} \end{gathered}`

Therefore the book value of an automobile at the end of 3 years is $13600.