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makami4
Sep 26, 2012, 07:32 AM
Equipment acquired on January 5, 2009, at a cost of 1,177,200, has an estimated useful life of 15 years, has an estimated residual value of $97,200, and is depreciated by the straight-line method. What was the book value of the Equipment 31, 2012, the end of the year?

pready
Sep 26, 2012, 12:08 PM
You need to calculate depreciation for years 1 through 4. Since this is straight method depreciaiton, figuring out the depreciation for each year is very simple.

Take the cost of the equipment less the salvage value to get your depreciable base, then take your depreciable base and divide it by the useful life to get your depreciation per year. Now take your depreciation per year times number of years, which is 4 years (2009, 2010, 2011, & 2012). Finally subtract your 4 years of depreciation from your original cost to get your book value of your equipment at the end of 2012.