REFERENCE: 11_03
A company acquired a new piece of equipment on January 1,2006 at a cost of $200,000.The equipment is expected to have a useful life of 10 years,a residual value of $20,000 and is being depreciated on a straightline basis.On January 1,2008,the equipment was appraised and determined to have a fair value of $190,000 and a residual value of $25,000 and a remaining useful life of 10 years.
-At what amount should the equipment be reported on the December 2008 balance sheet under US GAAP?

Question

Quizplus · Accepted Answer

Under US GAAP the company would report equipment at its book value.Straight-line depreciation is (200,000-20,000)/10 years or $18,000 per year.After 3 years the book value is (200,000-54,000)or $146,000.

REFERENCE: 11_03 A Company Acquired a New Piece of Equipment on January