Question

A piece of equipment is purchased for $18,000.00 and has a salvage value of $2,000.00. The estimated life is 10 years and the method of depreciation is straight-line. Shipping costs total $620.00 and installation costs are $590.00. The book value at the end of year 10 is

Answer 1

Answer:
2000
Step by step:
Total cost of the equipment=equipment cost+shipping cost+installation cost
Total cost of the equipment=18,000+620+590= 19210

Now compute the annual depreciation
depreciation per year=(Cost of equipment-Salvage Value) ÷ Estimated Useful Life = (19210 - 2000) ÷ 10 =1721 Per year

Compute the accumulated depreciation
1,721×10 years=17210

So the book value at the end of year 10 is
19210-17210= 2000