Norwood, Inc.
Norwood, Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation.The crane was purchased on January 1, 2015 and was used 2,700 hours in 2015 and 2,600 hours in 2016.
-Refer to the information about Norwood, Inc.
If Norwood uses the straight-line method, what is the book value at December 31, 2017?

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates annual depreciation as (Cost - Residual Value) / Useful Life. For the crane: ($80,000 - $5,000) / 8 = $9,375 per year. After 3 years (2015, 2016, 2017), total depreciation is $9,375 * 3 = $28,125. The book value at December 31, 2017, is $80,000 - $28,125 = $51,875.

Norwood, Inc. Norwood, Inc.purchased a Crane at a Cost of $80,000.The Crane