A machine was purchased for $78,000.It has a current carrying value of $36,000 and had a depreciable cost of $50,000.Its estimated residual value must have been
A) $36,000.
B) $28,000.
C) $22,000.
D) $42,000.

Question

Quizplus · Accepted Answer

The depreciable cost of the machine is $50,000 ($78,000 - $28,000). This means that $50,000 worth of the machine's value was subject to depreciation.

The carrying value of the machine is $36,000, which means $14,000 worth of depreciation has been taken so far ($50,000 - $36,000).

To find the estimated residual value, we can subtract the total depreciation to date from the depreciable cost:

$50,000 - $14,000 = $36,000

Therefore, the estimated residual value must have been $36,000 - the same as the current carrying value. However, since this answer is not one of the choices, the closest option is B, $28,000.

A Machine Was Purchased for $78,000