Question

Required: A machine that cost $390,000 has an estimated residual value of $30,000 and an estimated useful life of six years company uses straight-line depreciation. Calculate its book value at the end of year 5. (Do not round intermediate calculations .)

Answer 1

Step-by-step explanation:To calculate the book value of the machine at the end of year 5, we need to determine the annual depreciation expense and subtract it from the initial cost of the machine. Given: - Initial cost of the machine: $390,000 - Residual value: $30,000 - Useful life: 6 years - Depreciation method: Straight-line To calculate the annual depreciation expense, we need to subtract the residual value from the initial cost and divide the result by the useful life: Depreciation expense per year = (Initial cost - Residual value) / Useful life Depreciation expense per year = ($390,000 - $30,000) / 6 Depreciation expense per year = $360,000 / 6 Depreciation expense per year = $60,000