Question

Holly, Inc. has a building that originally cost $425,000. Holly expects to be able to sell the facility for $278,000 at the end of its useful life. The balance of the related Accumulated Depreciation account is $113,000. The residual value of the facility is_________.

Answer 1

The residual value of Holly, Inc.'s building is the estimated disposal value at the end of its useful life, which is $278,000. This value is not influenced by the current balance of the Accumulated Depreciation account.

Step-by-step explanation:

The residual value of a depreciable asset is the estimated amount that an entity can obtain from the disposal of the asset at the end of its useful life after deducting the expected costs of disposal. In the case of Holly, Inc., the question provides the expected sales price of the facility at the end of its useful life, which is $278,000. This is the residual value of the facility since the balance of the Accumulated Depreciation account does not affect the calculation of residual value.