Question

Jones Company purchased a piece of equipment for $12,000. It has accumulated depreciation at the end of three years of $4,000. What is the book value of the equipment at the end of year 3?

Answer 1

Answer:

The book value of the equipment at the end of year 3 is $ 8000.

Explanation:

The book value is the value at which the asset is reported in the balance sheet at reporting date. The book value is calculated by subtracting amount of depreciation charge against in income statement till repoting date form cost of asset. The detail calculation is given below.

BV = Cost - Ac depreciation

BV = 12,000 - 4,000 = $ 8,000