Answer:
AVC (Actual Cash Value) amounts to $6,540
Step-by-step explanation:
Computing the depreciation as:
Depreciation = (Value of the furniture / Estimated or useful life of the furniture) × Age of the furniture
where
Value of the furniture is $10,900
Estimated or useful life of furniture is 5 years
Age of furniture is 2 years
= ($10,900 / 5) × 2
= $2,180
= $4,360
Now, computing the ACV as:
ACV (Actual Cash Value) = Value of the furniture - Depreciation value
where
Value of furniture is $10,900
Depreciation value is $4,360
So, putting the values above:
ACV = $10,900 - $4,360
ACV = $6,540