HG Enterprises paid $108,000 for office furniture. The furniture has an estimated service life of 7 years and a salvage value of $3,000. After three years of use, the book value of the furniture will be:

Question

Quizplus · Accepted Answer

The book value after three years can be calculated using straight-line depreciation: (Cost - Salvage Value) / Useful Life = ($108,000 - $3,000) / 7 = $15,000 per year. After three years, depreciation is $15,000 * 3 = $45,000. The book value is $108,000 - $45,000 = $63,000.

HG Enterprises Paid $108,000 for Office Furniture