An asset purchased for $55 000 depreciates at a flat rate of 10% each year. What is the book value of the asset after 4 years?

Answer 1

To find the book value of the asset after 4 years, we need to calculate the depreciation for each year and subtract it from the original price.

Year 1 depreciation = $55,000 * 0.10 = $5,500
Book value after Year 1 = $55,000 - $5,500 = $49,500

Year 2 depreciation = $49,500 * 0.10 = $4,950
Book value after Year 2 = $49,500 - $4,950 = $44,550

Year 3 depreciation = $44,550 * 0.10 = $4,455
Book value after Year 3 = $44,550 - $4,455 = $40,095

Year 4 depreciation = $40,095 * 0.10 = $4,009.5
Book value after Year 4 = $40,095 - $4,009.5 = $36,085.5

The book value of the asset after 4 years is $36,085.5.