The book value of the equipment inventory

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Reference no: EM13179079

Supreme Auto Service opened a new service center three decades ago. At the time the center was preparing to open, new equipment was purchased totaling $388,000. Residual value of the equipment was estimated to be $48,000 after 20 years. The company accountant has been using straight-line depreciation on the equipment.

a. How much was the annual depreciation for the original equipment?

b. If the hydraulic lift had originally cost $11,640, what would its residual value be after 20 years?

c. After six years of operation, the original hydraulic lift was replaced with a new model that cost $22,000. Book value was allowed for the old machine as a trade-in. What was the old hydraulic lift's book value when the replacement machine was bought?

d. What was the book value of the equipment inventory at the six-year point, substituting the new hydraulic lift for the original after the new lift had joined the inventory?

Reference no: EM13179079

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