Question

a graphic design software has a purchase price of $360 and is expected to be fully depreciated over 3 years with no salvage value. what will be its book value at the end of the first year? $0 $240 $360 $120

Explanation:

Step1: Determine Depreciation Method

Since it's fully depreciated over 3 years with no salvage value, we use straight - line depreciation. The formula for straight - line depreciation per year is $\frac{\text{Purchase Price}-\text{Salvage Value}}{\text{Useful Life}}$. Here, purchase price = $360, salvage value = $0, and useful life = 3 years.

Step2: Calculate Annual Depreciation

Substitute the values into the formula: $\frac{360 - 0}{3}=\frac{360}{3}=120$. So the annual depreciation is $120.

Step3: Calculate Book Value at End of First Year

Book value = Purchase Price - Annual Depreciation. So, $360-120 = 240$.

Answer:

$240