A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. The new furniture will be kept for 10 years before being sold. Its estimated salvage value at the time is expected to be $5,000. Using the SL depreciation method, the book value at the end of the 5th year of use is:

Question

Business

Reginald Irwin

16 December, 18:57

A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. The new furniture will be kept for 10 years before being sold. Its estimated salvage value at the time is expected to be $5,000. Using the SL depreciation method, the book value at the end of the 5th year of use is:

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Answers (1)

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Ronnie Rose · Answer 1

Book value = $61250

Explanation:

Giving the following information:

A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. The new furniture will be kept for 10 years before being sold. Its estimated salvage value at the time is expected to be $5,000.

Straight-line depreciation = (purchase value - salvage value) / useful life = (110,000 - 5000) / 12 = 8750

Book value = depreciable value - accumulated depreciation

Book value = 105000 - (8750*5) = $61250