Grant Company purchased a machine on January 1, 2013 for $13,000 cash. The machine has an estimated useful life of 4 years and a $3,000 salvage value. What would be the book value of the machine reported on Grant's December 31, 2013 balance sheet?

Question

Quizplus · Accepted Answer

The amount of assets related to the machine on December 31 would be the machine's book value (cost minus accumulated depreciation). ($13,000 cost - $3,000 salvage value)/4 year useful life = $2,500 annual depreciation expense. Book value = $13,000 - $2,500 = $10,500.

Grant Company Purchased a Machine on January 1, 2013 for $13,000