Sargent Corporation bought equipment on January 1, 2010. The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would be

Question

Quizplus · Accepted Answer

The annual depreciation expense would be ($90,000 - $15,000) / 6 = $12,500. 
At the beginning of the third year, the accumulated depreciation would be $12,500 x 2 = $25,000. 
The book value of the equipment would be $90,000 - $25,000 = $65,000.

Sargent Corporation Bought Equipment on January 1, 2010