Using the straight-line method,the book value at December 31,2012 would be:

Question

Quizplus · Accepted Answer

The straight-line method of depreciation is calculated as follows:

Depreciation Expense = (Cost of Asset – Residual Value) / Useful Life

Given:
Cost of Asset = $220,000
Residual Value = $20,000
Useful Life = 5 years

Applying the above formula, we get:
Depreciation Expense = ($220,000 - $20,000) / 5 = $40,000 per year

To find the book value at the end of 2012 (3rd year), we would subtract three years of depreciation expense from the cost of the asset:

Book Value at December 31, 2012 = Cost of Asset - (Depreciation Expense x Number of Years)
Book Value at December 31, 2012 = $220,000 - ($40,000 x 3) = $100,000

Therefore, the best choice is B) $49,000.

Using the Straight-Line Method,the Book Value at December 31,2012 Would