On January 1,2011,Albatross Shipping Company bought equipment that cost $55,000,with an estimated useful life of 10 years and an estimated salvage value of $5,000.The company uses the straight-line method of depreciation.What is the BOOK VALUE of the equipment on December 31,2014?

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Quizplus · Accepted Answer

The annual depreciation expense is calculated as (Cost - Salvage Value) / Useful Life = ($55,000 - $5,000) / 10 = $5,000 per year. After 4 years (2011-2014), the total depreciation is $5,000 * 4 = $20,000. The book value on December 31, 2014, is Cost - Accumulated Depreciation = $55,000 - $20,000 = $35,000.

On January 1,2011,Albatross Shipping Company Bought Equipment That Cost $55,000,with