**Calculation of Book Value**On January 1, 20--, a depreciable asset was acquired for $5,760. The asset has an estimated useful life of four years (48 months) and no salvage value.Use the straight-line depreciation method to calculate the book value as of July 1, 20--.An input box with the value $120 is shown, followed by an 'x' indicating an incorrect answer.**Explanation:**To calculate the book value using the straight-line depreciation method, determine the annual depreciation expense by dividing the asset's cost by its useful life.Annual Depreciation = Cost of Asset / Useful Life = $5,760 / 48 months = $120 per month.Calculate the depreciation up to July 1, which is 6 months (January to June):Depreciation for 6 months = $120 * 6 = $720.Subtract this amount from the initial cost to find the book value as of July 1:Book Value = $5,760 - $720 = $5,040.

Solution: Depreciation from 1 Jan, 20 to July 1, 20 = (Cost - salvage) *6/48 = (5760-0) *6/48 =…

On January 1, 20--, a depreciable asset was acquired for $5,760. The asset has a estimated useful life of four years (48 months) and no salvage value. Use the straight-line depreciation method to calculate the book value as of July 1 20--

On January 1, 20--, a depreciable asset was acquired for $5,760. The asset has a estimated useful life of four years (48 months) and no salvage value. Use the straight-line depreciation method to calculate the book value as of July 1 20--

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

**Calculation of Book Value**

On January 1, 20--, a depreciable asset was acquired for $5,760. The asset has an estimated useful life of four years (48 months) and no salvage value.

Use the straight-line depreciation method to calculate the book value as of July 1, 20--.

An input box with the value $120 is shown, followed by an 'x' indicating an incorrect answer.

**Explanation:**
To calculate the book value using the straight-line depreciation method, determine the annual depreciation expense by dividing the asset's cost by its useful life.

Annual Depreciation = Cost of Asset / Useful Life = $5,760 / 48 months = $120 per month.

Calculate the depreciation up to July 1, which is 6 months (January to June):

Depreciation for 6 months = $120 * 6 = $720.

Subtract this amount from the initial cost to find the book value as of July 1:

Book Value = $5,760 - $720 = $5,040.

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