Asked by Sabella Johnson on May 09, 2024
Verified
On January 1 2015 Miraz Company purchased furniture for $7800. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31 2016 is
A) $0.
B) $2600.
C) $5200.
D) $7800.
Book Value
The value of an asset according to its balance sheet account balance, calculated by subtracting the asset's accumulated depreciation from its purchase price.
Salvage Value
At the conclusion of its useful life, an asset's salvage value is the anticipated market price upon resale.
- Compute the residual value of depreciating assets after accounting for the depreciation expense.
Verified Answer
NZ
Natalya ZamoraMay 16, 2024
Final Answer :
B
Explanation :
The furniture is depreciated over 3 years with no salvage value, meaning it loses 1/3 of its value annually. After 2 years (by the end of 2016), it would have depreciated by 2/3 of its original value ($7800), leaving 1/3 of its value, which is $2600.
Learning Objectives
- Compute the residual value of depreciating assets after accounting for the depreciation expense.