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On January 1, 2018, Sanderson, Inc. acquired a machine for $1,110,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $91,000. What is the book value of the machine at the end of 2019 if the company uses the straight-line method of depreciation? Group of answer choices $666,000 $702,400 $611,400 $665,996

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Answer:

$702,400

Explanation:

Calculation for the book value of the machine at the end of 2019

First step is to calculate the Depreciation using the straight-line method

Using this formula

Depreciation= (Cost - Residual value) / Useful life

Let plug in the formula

Depreciation = ($1,110,000 - $91,000) / 5

Depreciation= $203,800

Last step is to calculate Book value

Machine Book value = $1,110,000 - $203,800 - $203,800

Machine Book value = $702,400

Therefore the the book value of the machine at the end of 2019 will be $702,400

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