An asset purchased on January 1, 2006 for $60,000 that has an estimated life of 10 years will have a book value on December 31, 2009 of:
A) $60,000.
B) $24,000.
C) $36,000.
D) $42,000.

Question

Quizplus · Accepted Answer

The asset has been in use for 4 years (2006, 2007, 2008, 2009) out of its estimated life of 10 years. Therefore, the accumulated depreciation by the end of 2009 would be (4/10) * $60,000 = $24,000. The book value can be calculated by subtracting accumulated depreciation from the original cost of the asset: 
$60,000 - $24,000 = $36,000. Thus, the correct answer is C.

An Asset Purchased on January 1, 2006 for $60,000 That