Answer: $10,000 and $25,000
Explanation:
DEPRECIATION FOR 2022.
Straight line method of depreciation means it depreciates by the same amount every year. You can calculate by
(Cost - Residual Value) / useful life.
=($45,000 - $5,000) / 4
= $10,000.
Each year the framing machine reduces by $10,000 meaning in 2022 the depreciation will be $10,000.
BOOK VALUE AT DECEMBER 31, 2022
We've established that every year the value drops by $10,000.
On December 31, 2021, it dropped by $10,000.
On December 31, 2022, it dropped by another $10,000.
Adding that together gives you 10,000 + 10,000 = $20,000.
$20,000 is the total depreciation at the end of 2022.
Subtract that figure from the cost,
=$45,000-$20,000
=$25,000.
BOOK VALUE ON DECEMBER 31, 2022 is $25,000.
