Depreciation = Original cost / useful life
Depreciation = $ 120,000 / 3 years
Depreciation= $ 40,000 per year
year |
Opening Book Value |
Depreciation |
Net Book Value |
1 |
$ 120,000 |
$ 40,000 |
$ 80,000 |
2 |
$ 80,000 |
$ 40,000 |
$ 40,000 |
After year 2 Net Book Value of equipment = 40,000
Option 2 is correct answer.
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