On January 1,2016,Martini,Inc.acquired a machine for $1,050,000.The estimated useful life of the asset is five years.Residual value at the end of five years is estimated to be $100,000.What is the book value of the machine at the end of 2017 if the company uses the straight-line method of depreciation?

Question

Quizplus · Accepted Answer

Straight-line depreciation = (Cost - Residual value)/ Useful life
Depreciation as per the straight-line method = ($1,050,000 - $100,000)/ 5 = $190,000
Book value of the asset at the end of 2017 = $1,050,000 - $190,000 - $190,000 = $670,000.