Final answer:
The book value of the equipment at the end of the fourth year, using straight-line depreciation, is calculated to be $150,000. This is found by subtracting the accumulated depreciation after four years from the original cost of the equipment.
Step-by-step explanation:
The question asks for the book value of equipment after four years, using straight-line depreciation where the equipment has an initial cost, expected salvage value, and a useful life. To find the book value, we use the formula for straight-line depreciation:
Annual Depreciation Expense = (Cost of the Equipment - Salvage Value) / Useful Life
Substituting the values provided:
Annual Depreciation Expense = ($350,000 - $50,000) / 6 years
Annual Depreciation Expense = $300,000 / 6
Annual Depreciation Expense = $50,000 per year
After four years, the amount depreciated would be:
Total Depreciation after 4 years = Annual Depreciation Expense × 4
Total Depreciation after 4 years = $50,000 × 4
Total Depreciation after 4 years = $200,000
The book value at the end of the fourth year is the original cost minus the total depreciation after four years:
Book Value at End of Fourth Year = Cost of the Equipment - Total Depreciation
Book Value at End of Fourth Year = $350,000 - $200,000
Book Value at End of Fourth Year = $150,000