Justice, Inc. purchased a machine for $15,000 two years ago. The machine had no residual value and had an estimated useful life of 10 years. If the company uses the straight-line depreciation method, calculate the current book value of the machine.

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Quizplus · Accepted Answer

The straight-line depreciation method calculates depreciation by evenly allocating the cost of the asset over its useful life. The annual depreciation expense is ($15,000 / 10 years) = $1,500. After 2 years, the total depreciation is $1,500 * 2 = $3,000. The current book value is the original cost minus the accumulated depreciation: $15,000 - $3,000 = $12,000.