Homework Answers
Ans: The computer's book value at the end of year 2 was $1,000 .
Explanation:
Initial amount ( P ) = $2000
Salvage value ( F ) = $500
Life of the asset ( n ) = 3 years
Annual depreciation amount = ( P - F ) / n = ( $2000 - $500) / 3 = $1500 / 3 = $500
Book value = Previous year book value - Current year depreciation amount
| End of the Year | Depreciation Amount | Book Value = Previous year book value - Current year depreciation amount |
| 0 | 0 | $2,000 |
| 1 | 500 | $1,500 |
| 2 | 500 | $1,000 |
| 3 | 500 | $500 |
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