Round Up Corporation uses the cost model to account for its property, plant, and equipment, which were acquired on January 1, 2020, for $ 200,000. Round Up uses straight-line depreciation and estimates the assets will have an eight-year life with no residual value. Assuming Round Up did not experience any impairment losses, the December 31, 2021, net book value of the assets is
A) $ 200,000.
B) $ 175,000.
C) $ 150,000.
D) $ 125,000.

Question

Quizplus · Accepted Answer

The annual depreciation expense is $25,000 ($200,000 / 8 years). After two years, the accumulated depreciation is $50,000 ($25,000 x 2), so the net book value is $150,000 ($200,000 - $50,000).

Round Up Corporation Uses the Cost Model to Account for Its