Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truc

Question

Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truck body and chassis for an additional $100,000 to make the unit mobile. The unit-truck system will be depreciated as one asset. The functional life is 8 years, and the salvage is estimated to be 7% of the purchase price of the imaging unit regardless of the number of years of service. Use classical Straight Line depreciation to determine the salvage value, annual depreciation, and book value after 5 years of service. The salvage value is determined to be $_____. The annual depreciation is determined to be $_____ The book value after 5 years of service is determined to be $ ______

Explanation / Answer

Cost of sonogram imaging unit 300000 Add: Cost of truck body and chasis 100000 Total cost 400000 Salvage value @ 7% 28000 Depreciation amount 372000 (Cost-Salvage value) Life 8 years Annual depreciation 46500 Accumulated depreciation of 5 yrs 232500 Book value at the end of 5th year 167500

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