An asset costing $17,000 was purchased on 01/01/15. It had an estimated useful l

Question

An asset costing $17,000 was purchased on 01/01/15. It had an estimated useful life of 5 years and an estimated residual value of $2,000. If the company uses the Straight Line Method of depreciation, then the depreciation expense for 2015 would be:

An asset costing $17,000 was purchased on 01/01/15. It had an estimated useful life of 5 years and an estimated residual value of $2,000. If the company uses the Straight Line Method of depreciation, then the Book Value of the asset at the END of 2015 would be:

Explanation / Answer

Depreciation = (Asset cost - residual value) / life of asset

= ($17000 - $2000) / 5

= $15000 / 5

=$3000

Book value of the asset at the END of 2015 would be = Asset cost - Depreciation

= $17000 - $ 3000

= $14000

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