Question

Question 4 0.6 points Save Answer Pearson Company bought a machine on January 1, 2017. The machine cost $180,000 and had an expected salvage value of $30,000. The life of the machine was estimated to be 5 years. The book value of the machine at the end of the second year would be $180,000. O $150,000. O $120,000. O $60,000

Answer 1

C. $120,000

Depreciation per year = (Cost - Salvage value) / Useful life = ($180,000 - $30,000) / 5 = $30,000

Depreciation for two years = $30,000 × 2 = $60,000

Book value at the end of the second year = Cost - Accumulated depreciation

Book value at the end of the second year = $180,000 - $60,000

Book value at the end of the second year = $120,000