Arizona Teak Company paid $54,000 for computers. These computers have an estimated service life of 3 years and a salvage value of $3,000. After one year of use, the book value of the computers will be:

Question

Quizplus · Accepted Answer

The straight-line depreciation method is used here. The annual depreciation expense is calculated as (Cost - Salvage Value) / Useful Life = ($54,000 - $3,000) / 3 = $17,000. After one year, the book value is Cost - Depreciation = $54,000 - $17,000 = $37,000.

Arizona Teak Company Paid $54,000 for Computers