What would the book value be at the end of year 3 for a computer system using the straight-line method when cost is $5,000,residual value is $1,000,and the expected life is 4 years?

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Quizplus · Accepted Answer

The straight-line depreciation method spreads the cost of the asset evenly over its useful life. The annual depreciation expense is calculated as (Cost - Residual Value) / Useful Life. For this computer system, the annual depreciation is ($5,000 - $1,000) / 4 = $1,000. After 3 years, the total depreciation is 3 * $1,000 = $3,000. Thus, the book value at the end of year 3 is Cost - Accumulated Depreciation = $5,000 - $3,000 = $2,000.

What Would the Book Value Be at the End of Year