On January 1,2018,Sanderson Company acquired a machine for $1,070,000.The estimated useful life of the asset is five years.Residual value at the end of five years is estimated to be $87,000.What is the book value of the machine at the end of 2019 if the company uses the straight-line method of depreciation?

Question

Quizplus · Accepted Answer

Straight-line depreciation = (Cost - Residual value) / Useful life
Depreciation as per the straight-line method = ($1,070,000 - $87,000) / 5 = $196,600
Book value of the asset at the end of 2019 = $1,070,000 - $196,600 - $196,600 = $676,800.

On January 1,2018,Sanderson Company Acquired a Machine for $1,070,000