Answer:
Annual depreciation= $14,420
Book value= $50,160
Explanation:
Giving the following information:
Purchase price= $79,000
Useful life= 5 years
Salvage value= $6,900
To calculate the depreciation expense, we need to use the following formula:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (79,000 - 6,900) / 5
Annual depreciation= $14,420
Now, the book value:
Book value= purchase price - accumulated depreciation
Book value= 79,000 - (14,420*2)
Book value= $50,160
