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24 February, 23:04

Kansas Enterprises purchased equipment for $72,500 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $7,950 at the end of five years. Using the straight-line method, the book value at December 31, 2021, would be:

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  1. 25 February, 01:13
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    Depreciation expense $12,910

    Book value $46,680

    Explanation:

    Kansas Enterprises

    Formula for Depreciation expenses

    Annual depreciation expense = (Cost-Residual value) / Useful Life

    Where,

    Cost = 72,500

    Residual value = 7,950

    Useful life = 5 years

    Let plug in the formula

    = (72,500-7950) / 5

    =64,550/5

    =$12,910/year

    Therefore depreciation expense for 2021

    =$12,910

    Calulation for Book value

    Book value = $72,500 - ($12,910 * 2)

    $72,500 - $25,820

    =$46,680

    Therefore the book value would be $46,680
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