The Chester Company has just purchased $40,900,000 of plant and equipment that h

Question

The Chester Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (Use FASB GAAP) Select: 1 $32,720,000 $29,448,000 $35,446,667 $33,538,000 The Chester Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (Use FASB GAAP) Select: 1 $32,720,000 $29,448,000 $35,446,667 $33,538,000

Explanation / Answer

Ans is d $33,538,000

Cost of Plant and Equipment    40,900,000.00 Salvage Value      4,090,000.00 Life in Years                     15.00 Depreciation each year = Cost - Salvage Value/ Life in years Depreciation each year =(40,900,000-4,090,000)/15 Depreciation each year =(36,810,000)/15 Depreciation each year =2,454,000 Depreciation for 3 Years (2,454,000*3)      7,362,000.00 Book Value after 3 Years (40,900,000 - 7,362,000)    33,538,000.00

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