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Straight-Line Depreciation Book Value

Easystraight-line depreciationbook value
Survey equipment costs $80,000, has an 8-year life and a salvage value of $8,000. Using straight-line depreciation, its book value at the end of year 4 is most nearly:
  1. A$36,000
  2. B$40,000
  3. C$44,000
  4. D$53,000
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Answer: C. $44,000

Equation: straight-line depreciation D = (P − S)/n; book value BVk = P − k·D. Values: P = $80,000 first cost, S = $8,000 salvage, n = 8 years, k = 4. Step 1: D = (80,000 − 8,000)/8 = $9,000 per year. Step 2: BV₄ = 80,000 − 4 × 9,000 = $44,000. $40,000 ignores salvage; $36,000 is the accumulated depreciation, not book value; $53,000 uses 3 years.
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