CALCULATION OF BOOK VALUE On June 1, 20--, a depreciable asset was acquired for $6,840

Accounting Oct 10, 2020

CALCULATION OF BOOK VALUE

On June 1, 20--, a depreciable asset was acquired for $6,840. The asset has an estimated useful life of six years (72 months) and no salvage value. Using the straight-line depreciation method, calculate the book value as of December 31, 20--.

Expert Solution

Computation of the book value as of December 31, 20--:-

Depreciation expense per month = (Cost - Salvage value) / Useful life

= ($6,840 - $0) / 72

= $95

Accumulated depreciation = $95 * 7

= $665

Book value = Cost - Accumulated depreciation

= $6,840 - $665

= $6,175

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