A company that manufactures pitot tubes for commercial jet aircraft uses the str

Question

A company that manufactures pitot tubes for commercial jet aircraft uses the straight line method to track depreciation on their books. Newly acquired lathes cost $310,000, and have a 5-year life and a $10,000 salvage value. Determine the depreciation charge for year 3 and the book value after year 3.

Question 2 options:

Year 3 depreciation charge = $186,000, Book Value = $124,000

Year 3 depreciation charge = $62,000, Book Value = $124,000

Year 3 depreciation charge = $180,000, Book Value = $130,000

Year 3 depreciation charge = $60,000, Book Value = $130,000

Year 3 depreciation charge = $186,000, Book Value = $124,000

Year 3 depreciation charge = $62,000, Book Value = $124,000

Year 3 depreciation charge = $180,000, Book Value = $130,000

Year 3 depreciation charge = $60,000, Book Value = $130,000

Explanation / Answer

Depreciation per year=(Cost-Salvage value)/USeful life

=(310,000-10,000)/5=$60,000

Hence book value after year 3=310,000-(60,00*3)=$130,000

Hence the correct option is D.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.