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:

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