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How to calculate book value of salvaged equipment
X Company has just purchased $39,660,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $3,966,000 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles.
Select: 1 $37,280,400 $33,314,400 $37,016,000 $35,694,000 |
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You need to know what method of depreciation to use. i.e. straight line, declining balance, MACRS, sum of the year digits method, or you will have to calculate depreciation for each method until you find an amount that is one of your possible answers.
For the different depreciation methods use your textbook for the formulas, then use the formulas to calculate depreciation for each method. |
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