A Tamarac loader cost $134,000, has estimated salvage of $14,000, and is depreciated straight-line over 5 years. After 2 years, what book value remains?
Correct Answer
B) $86,000
Book value equals cost less accumulated straight-line depreciation.
Why This Is the Correct Answer
Book value equals cost less accumulated straight-line depreciation.
Why the Other Options Are Wrong
Option A: $80,400
$80,400 is below the supported result for equipment book value; it likely uses the wrong base, period, or account bucket.
Option C: $110,000
$110,000 is above the supported result for equipment book value; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $62,000
$62,000 is below the supported result for equipment book value; it likely uses the wrong base, period, or account bucket.
Memory Technique
Schedule Tamarac money test: bucket before math for equipment book value.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Property and Equipment, Depreciation; use the job ledger figures in the stem and recompute the same accounting measure.
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