Sargent Corporation bought equipment on January 1, 2021.The equipment cost $360,000 and had an expected salvage value of $60,000.The life of the equipment was estimated to be six years.Assuming straight-line deprecation, the book value of the equipment at the beginning of the third year would be

Question

Quizplus · Accepted Answer

The annual depreciation expense of the equipment can be calculated as ($360,000 - $60,000) / 6 = $50,000.
At the beginning of the third year, the equipment will have been depreciated for two years, so the accumulated depreciation will be $50,000 x 2 = $100,000.
Therefore, the book value of the equipment at the beginning of the third year will be $360,000 - $100,000 = $260,000.

Sargent Corporation Bought Equipment on January 1, 2021