A building was purchased for $50,000.The asset has an expected useful life of 6 years and depreciation expense each year is $8,000 using the straight-line method.What is the residual value of the building?
A)$0.
B)$2,000.
C)$4,000.

Question

Quizplus · Accepted Answer

The residual value of an asset is the estimated amount that an asset is worth at the end of its useful life. In this case, the asset was purchased for $50,000 with a useful life of 6 years. Using the straight-line method, the annual depreciation expense is $8,000 ($50,000 divided by 6 years). 
Therefore, the residual value can be calculated as follows: 
Residual value = Purchase price - Accumulated depreciation
Accumulated depreciation after 6 years = $8,000 x 6 = $48,000
Residual value = $50,000 - $48,000 = $2,000
Hence, the correct answer is B.

A Building Was Purchased for $50,000