An asset purchased on January 1,2012 for $60,000 that has an estimated life of 10 years will have a book value on December 31,2015 of:

Question

Quizplus · Accepted Answer

Using straight-line depreciation method, the annual depreciation expense would be $6,000 ($60,000/10 years). Since the asset was purchased on January 1, 2012, it would have been depreciated for four years by December 31, 2015. Therefore, cumulative depreciation would be $24,000 ($6,000 x 4 years). Subtracting this from the original cost of $60,000 gives a book value of $36,000. So the correct answer is C) $36,000.

An Asset Purchased on January 1,2012 for $60,000 That Has