Question

A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. The new furniture will be kept for 10 years before being sold. Its estimated salvage value at the time is expected to be $5,000. Using the SL depreciation method, the book value at the end of the 5th year of use is:

Answer 1

Book value= $61250

Step-by-step explanation:

Giving the following information:

A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. The new furniture will be kept for 10 years before being sold. Its estimated salvage value at the time is expected to be $5,000.

Straight-line depreciation= (purchase value - salvage value)/useful life= (110,000 - 5000)/12= 8750

Book value= depreciable value - accumulated depreciation

Book value= 105000 - (8750*5)= $61250