Saint Paul Company owns a fixed asset with an original cost of $100,000.The company estimates it will use the fixed asset for four years,at which time it will be sold for $10,000.The company uses straight-line depreciation.The book value of the fixed asset after three years of use is ________.
A) $22,500
B) $25,000
C) $32,500
D) $35,000

Question

Quizplus · Accepted Answer

The annual depreciation expense for the asset is ($100,000 - $10,000) / 4 = $22,500.
After three years of use, the accumulated depreciation is $22,500 * 3 = $67,500.
Therefore, the book value of the fixed asset after three years of use is $100,000 - $67,500 = $32,500.

Saint Paul Company Owns a Fixed Asset with an Original