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jack's Auto Shop purchased a conveyor belt at $500,000 at the end of 2018
jack's Auto Shop purchased a conveyor belt at $500,000 at the end of 2018. It's useful life is 10 years and has a salvage value of $20,000. What is the book value of the conveyor belt at the end of 2020?
|
$400,000 |
||
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$404,000 |
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$500,000 |
||
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$96,000 |
Expert Solution
Depreciable cost of asset = Purchase price - Salvage value
= 500000 - 20000
= 480000
Depreciation expense = Depreciable cost / Useful life
= 480000 / 10
= 48000
Total depreciation for 2 years (i.e. 2019 and 2020) = 48000*2 = 96000
Book value at end of 2020 = 500000 - 96000 = 404000
Correct choice B
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