Final answer:
The book value after 3 years using straight-line depreciation is $73,400. You arrive at this by first calculating the annual depreciation and then subtracting three years' worth of depreciation from the initial equipment cost.
Step-by-step explanation:
The book value of the equipment after 3 years using straight-line depreciation is $73,400.
The book value of the equipment after 3 years can be calculated using the straight-line depreciation method. Straight-line depreciation is calculated by subtracting the salvage value from the initial cost of the equipment and then dividing the result by the useful life of the equipment. In this case, the initial cost is $100,000, the salvage value is $18,000, and the useful life is 10 years.
To calculate the straight-line depreciation, you first find the total depreciation over the equipment's useful life by subtracting the salvage value from the initial cost. In this case, the total depreciation is $100,000 - $18,000 = $82,000. This amount is then divided by the number of years in the useful life to find the annual depreciation. Here, the annual depreciation is $82,000 / 10 = $8,200 per year.
After 3 years, the accumulated depreciation is 3 times the annual depreciation, which is $8,200 x 3 = $24,600. Finally, to find the book value after 3 years, you subtract the accumulated depreciation from the initial cost, resulting in $100,000 - $24,600 = $73,400.