Solve the problem.
-A drilling rig cost $20,600 and has an estimated life of 8 years and a scrap value of $1,030. Find the
Book value at the end of 5 years using the straight-line method. Round to nearest dollar.

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates the depreciation by evenly allocating the asset's cost over its useful life. The formula is: (Cost - Scrap Value) / Useful Life. For the drilling rig: ($20,600 - $1,030) / 8 = $2,446.25 annual depreciation. After 5 years, the total depreciation is $2,446.25 * 5 = $12,231.25. The book value is the cost minus the accumulated depreciation: $20,600 - $12,231.25 = $8,368.75, rounded to $8,369.

Solve the Problem. -A Drilling Rig Cost $20,600 and Has an Estimated Life