Question

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.

Answer 1

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