A machine purchased on 1 July 2016 cost $100 000 and has a zero estimated salvage value.The useful life of the machine is five years.If the machine was sold on 30 September 2018,what would its net book value be?
A) $45 000
B) $50 000
C) $55 000
D) $60 000

Question

Quizplus · Accepted Answer

Depreciation per year = ($100,000 - $0) / 5 years
= $20,000 per year

Depreciation for 2016 (July 1 to Dec 31) = ($20,000 / 12) x 6 = $10,000
Depreciation for 2017 = $20,000
Depreciation for 2018 (Jan 1 to Sep 30) = ($20,000 / 12) x 9 = $15,000

Accumulated depreciation = $10,000 + $20,000 + $15,000
= $45,000

Net book value = $100,000 - $45,000
= $55,000

A Machine Purchased on 1 July 2016 Cost $100 000