Question

2. Fill in the book value at the end of year 1 under each depreciation method when residual value is $36,000 and useful life is 4 years: Depreciation method: Straight-line Units-of-Output

Answer 1

$260,437.50

$108,750

Explanation:

Here is the complete question :

Fill in the book value at the end of year 1 under each depreciation method when residual value is $36,000 and useful life is 4 years: Depreciation method:

Straight-line $335,250

Units-of-Output

Double-declining $217,500

Book value = cost of the asset - first year depreciation expense

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

(335250 - 36,000) / 2 = $74,812.50

Book value = $335,250 - $74,812.50 = $260,437.50

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life) = 2/4 = 0.5

$217,500 x 0.5 = 108,750

Book value = $217,500 - 108,750 = $108750