SOLUTION: What is the value of an asset after 8 years of use if it depreciates from its original value of 500, 000 to its salvage value of 1.5% in 10 years? (Use Straight Line Method)

Question 1189740: What is the value of an asset after 8 years of use if it depreciates from its original value of 500, 000 to its salvage value of 1.5% in 10 years? (Use Straight Line Method)
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
original value is 500,000
salvage value is .015 * 500,000 = 7,500.
straight line depreciation takes the oroginal value and subtracts the salvage value and divides that by the number of years of economic life to get a depreciation charge of (500,000 - 7,500) / 10 = 49,250 per year.
after 8 years, the depreciation charge is 8 * 49,250 = 394,000.
subtract that from 500,000 to get a remaining value of 106,000.
that is the book value of the asset after 8 years.

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