Question

A new building that costs $1,400,000 has a useful life of 10 years and a scrap value of $100,000. Using straight-line depreciation, find the equation for the value V in terms of t, where t is in years. (Make sure you use t and not x in your answer.)

Answer 1

Answer:

V = $1,400,000 - $130,000t

Explanation:

Data provided in the question:

Cost of the new building = $1,400,000

Useful life = 10 years

Scrap value = $100,000

Now,

using the straight line method

Annual depreciation = [ Cost - Scrap value ] ÷ Useful life

= [$1,400,000 - $100,000 ] ÷ 10

= $130,000

Value of building = Cost of the building - Depreciation for 10 years

V =  $1,400,000 - [ Annual depreciation × Time ]

V =  $1,400,000 - $130,000t