Answer:
Book value= $302,000
Explanation:
Giving the following information:
Purchase price= $460,000
Salvage value= $65,000
Useful life= 5 years
First, we need to calculate the annual depreciation.
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (460,000 - 65,000) / 5
Annual depreciation= $79,000
Now, the accumulated depreciation after 2 full years:
Accumulated depreciation= 79,000*2= $158,000
Finally, the book value:
Book value= purchase price - accumulated depreciation
Book value= 460,000 - 158,000
Book value= $302,000
