Question

5. A wood products company has decided to purchase new logging equipment for $102,000 with a trade-in of its old equipment. The old equipment has a BV of $7,000 at the time of the trade-in. The new equipment will be kept for 11 years before being sold. Its estimated SV at the time is expected to be $3000. Using the SL method, what is the BV at the end of the depreciable life? Choose the correct answer below. OA. The BV at the end of the depreciable life is $0. 7-70 B. The BV at the end of the depreciable life is $7,000. The BV at the end of the depreciable life is $3,000. c. D. The BV at the end of the depreciable life is $7,364

Answer 1

Solution: The BV at the end of depreciable asset is $3000 Working: BV = 102000+7000-3000 = 106,000 Year Depreciation Schedule Depreciation Accumulated Expense Depreciation Book Value Year Start Book Value Year End $9,363.64 $106,000 $96,636 $87,273 $9,363.64 $9,363.64 $9,363.64 $77,909 $68,545 $9,363.64 $59,182 $9,363.64 $9,364 $18,727 $28,091 $37,455 $46,818 $56,182 $65,545 $74,909 $84,273 $93,636 $103,000 $96,636 $87,273 $77,909 $68,545 $59,182 $49,818 $40,455 $31,091 $21,727 $12,364 $3,000 $49,818 $9,363.64 $40,455 $9,363.64 $31,091 $9,363.64 $21,727 $12,364 $9,363.64 $9,363.64 11