An asset was purchased 10 years ago for $150,000.It useful lifetime was estimated to be 15 years,so the asset has 5 years left before being sold for $5000 (scrap value).If this asset is depreciated using the straight-line method,what is the book value of the asset now?

Question

Quizplus · Accepted Answer

Straight-line depreciation method allocates the same amount of depreciation over the useful life of an asset. Therefore, the annual depreciation of the asset is $((150,000 - 5,000)/15) = $9,666.67.

As the asset is being used for 10 years, the total depreciation expense would be calculated as $9,666.67 x 10 = $96,666.67.

The book value of the asset now would be calculated as $150,000 - $96,666.67 = $53,333.33. Therefore, the best choice is C.

An Asset Was Purchased 10 Years Ago for $150,000