A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or 5 million units.The equipment is estimated to have a salvage value of $13,400.
-Assuming the straight-line method of depreciation,what is the book value at the end of the second year?
A) $166,667.00
B)$88,977.80
C)$96,416.25
D)$168,900.00
E)$137,800.00

Question

A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or 5 million units.The equipment is estimated to have a salvage value of $13,400.
-Assuming the straight-line method of depreciation,what is the book value at the end of the second year? 
A) $166,667.00
B)$88,977.80
C)$96,416.25
D)$168,900.00
E)$137,800.00

Quizplus · Accepted Answer

The annual depreciation expense using the straight-line method is ($200,000 - $13,400) / 6 = $31,100. After two years, the accumulated depreciation is $31,100 * 2 = $62,200. The book value at the end of the second year is $200,000 - $62,200 = $137,800.

A Company Purchased Equipment Valued at $200,000 on January 1