The asset section of the January 1, 20X9, balance sheet of Big Valley Company includes a machine which was acquired on January 1, 20X5. The machine's original cost was $500,000, and the estimated life was determined to be 10 years. The estimated residual value was zero, and the straight- line method of depreciation was chosen. The book value of the machine as of January 1, 20X9, is:
A) $450,000
B) $300,000
C) $500,000
D) $250,000

Question

Quizplus · Accepted Answer

Depreciation expense for each year = (Cost - Residual value) / Estimated life= (500,000 - 0) / 10= 50,000Book value as of January 1, 20X9 = Cost - (Depreciation expense * Number of years)= 500,000 - (50,000 * 4)= 500,000 - 200,000= $300,000

The Asset Section of the January 1, 20X9, Balance Sheet