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A global positioning system (GPS) receiver is purchased for $3,000. The IRS informs your company that the useful (class) life of the system is seven years. The expected market (salvage) value is $200 at
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17 votes
A global positioning system (GPS) receiver is purchased for $3,000. The IRS informs your company that the useful (class) life of the system is seven years. The expected market (salvage) value is $200 at the end of year seven. a. Use the straight-line method to calculate depreciation in year three.

User Iamkeir
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1 Answer

21 votes
21 votes

Answer: $400

Step-by-step explanation:

To solve the question, we should note that the annual depreciation under the straight line depreciation method is given as:

= ( Cost - Salavage ) / Estimated Useful Life

= ($3,000 - $200 ) / 7

= $2800 / 7

= $400.

Therefore, the depreciation in year 3 will be $400

User Maxim Grach
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