Answer:
Book value= $16,000
Explanation:
Giving the following information:
On January 1, 2018, Pritchett Corporation purchased equipment for $50,000. The equipment had a five-year life with a $10,000 residual value.
First, we need to calculate the annual depreciation. Then, we can determine the accumulated depreciation and the book value on January 1, 2021:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (50,000 - 10,000)/5= 8,000
Accumulated depreciation= 8,000*3= $24,000
Book value= 40,000 - 24,000= $16,000
