Question

The digby company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. the expected salvage value at the end of 15 years is $4,090,000. what will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (use fasb gaap)

Answer 1

Assuming that depreciation will be provided based on Fixed Value Method which will be spread equally for all 15 years of assets life, the amount of depreciation each year will be $399911.10 and so after two years the value of asset after deducting depreciation amount will be $4,129,9911