Question

kansas enterprises purchased equipment for $74,500 on january 1, 2024. the equipment is expected to have a five - year service life, with a residual value of $7,250 at the end of five years. using the straight - line method, the book value at december 31, 2024, would be: multiple choice $59,600 $61,070 $67,150 $53,720

Explanation:

Step1: Calculate annual depreciation

The formula for straight - line depreciation is $Depreciation=\frac{Cost - Residual\ Value}{Useful\ Life}$. Here, the cost of the equipment is $74500$, the residual value is $2750$, and the useful life is 5 years. So, $Depreciation=\frac{74500 - 2750}{5}=\frac{71750}{5}=14350$.

Step2: Calculate book value at the end of 2024

The book value (BV) at the end of the first year is calculated as $BV = Cost−Depreciation$. So, $BV=74500 - 14350 = 60150$.

Answer:

None of the provided options are correct. The correct book value is $60150$.