Question

Benz and Jacobs Accounting purchased a new computer system for $3,500. The total resale value after 5 years is estimated to be $525. Using the straight-line method, Benz and Jacobs determined that the computer system would depreciate $595 per year. What is the salvage value of the system?

Answer 1

Answer: The salvage value of the system is $525.

Step-by-step explanation:

Since we have given that

Cost of a new computer system = $3500

Number of useful life of the asset = 5 years

Annual depreciation expense = $595

So, we need to find the "Salvage value of the system":

According to straight line method, we know the formula :

$Annual\ depreciation=\dfrac{Cost-Salvage\ value}{Useful\ life}\\\\\ 595=\dfrac{3500-salvage\ value}{5}\\\\ 595\times 5=3500-Salvage\ value\\\\\ 2975=\ 3500-Salvage\ value\\\\\ 3500-\ 2975=Salvage\ value\\\\\ 525=Salvage\ value$

Hence, The salvage value of the system is $525.

Answer 2

3500-5*595=525 salvage value