Brinkman Corporation bought equipment on January 1, 2007. The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would bea. $90,000b. $75,000c. $65,000d. $25,000

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Business

Carrot

23 April, 14:26

Brinkman Corporation bought equipment on January 1, 2007. The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would bea. $90,000b. $75,000c. $65,000d. $25,000

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Jillian Choi · Answer 1

The correct answer is C.

Explanation:

Giving the following information:

The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.

Annual depreciation = (original cost - salvage value) / estimated life (years)

Annual depreciation = (90,000 - 15,000) / 6 = 12,500

Accumulated depreciation year 2 = 12,500*2 = 25,000

Book value = 90,000 - 25,000 = 65,000