On January 2,2019,Kellogg Corporation acquired equipment for $700,000.The estimated life of the equipment is 5 years or 90,000 hours.The estimated residual value is $40,000.What is the book value of the asset on December 31,2020,if Kellogg Corporation uses the straight-line method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Question

Quizplus · Accepted Answer

($700,000 - $40,000)÷ 5 years = $132,000 depreciation expense per year
$132,000 × 2 years = $264,000 accumulated depreciation at end of second year
Book value = $700,000 - $264,000 = $436,000

On January 2,2019,Kellogg Corporation Acquired Equipment for $700,000