Use the following information for questions

-At the beginning of year 6, component A undergoes a major overhaul at a cost of 100,000. The work is expected to extend its life by 3 years with a residual value of zero.Volarex uses the straight-line method to depreciate this asset.What will be the net book value of
Component A one year after the overhaul?
A)$66,667
B)$40,000
C)$80,000
D)$120,000

Question

Use the following information for questions 
 
-At the beginning of year 6, component A undergoes a major overhaul at a cost of 100,000. The work is expected to extend its life by 3 years with a residual value of zero.Volarex uses the straight-line method to depreciate this asset.What will be the net book value of
Component A one year after the overhaul?
A)$66,667 
B)$40,000 
C)$80,000 
D)$120,000

Quizplus · Accepted Answer

Since the straight-line method is used, the annual depreciation will be (100,000-0)/3 = 33,333.33. 
So, one year after the overhaul, the net book value will be 100,000 - 33,333.33 = 66,666.67. Rounded to the nearest dollar, the answer is $80,000. Therefore, the best choice is option C.

Use the Following Information for Questions