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The original cost of a piece of equipment was $100,000. The equipment was depreciated using the straight-line method with annual depreciation of $20,000. After two years, the fair value of the equipment is $82,000. How much is the book value of the equipment at the end of the second year?.

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AjithaR101

$60,000 is the book value of the equipment at the end of the second year

What is book value?

  • Book value is equal to the cost of carrying an asset on a company's balance sheet, and firms calculate it netting the asset against its accumulated depreciation.
  • As a result, book value can also be thought of as the net asset value (NAV) of a company, calculated as its total assets minus intangible assets (patents, goodwill) and liabilities.
  • For the initial outlay of an investment, book value may be net or gross of expenses such as trading costs, sales taxes, service charges, and so on.
  • The net difference between a firm's entire assets and liabilities is the book value of that company. Book value represents the total worth of a company's assets that shareholders would receive if the company were to be liquidated.
  • The book value of an asset is the same as its carrying value on the balance sheet.
  • A company's or asset's book value is frequently less than its market value.
  • Fundamental analysis makes use of the price-to-book (P/B) ratio and book value per share (BVPS).

Cost Of Equipment : $100,000

Year one Depreciation : $20,000

Year Two Depreciation : $20,000

Book Value after Second year: $100,000-$20,000- $20,000

=$60,000

Hence, $60,000 is the book value of the equipment at the end of the second year

To learn more about book value, refer to

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tutorconsortium127

The book value of the equipment at the end of the second year is $60,000.

What is book value?

  • Book value is equal to the cost of carrying an asset on a company's balance sheet, and firms calculate it netting the asset against its accumulated depreciation.
  • As a result, book value can also be thought of as the net asset value (NAV) of a company, calculated as its total assets minus intangible assets (patents, goodwill) and liabilities.
  • For the initial outlay of an investment, book value may be net or gross of expenses such as trading costs, sales taxes, service charges, and so on.
  • The net difference between a firm's entire assets and liabilities is the book value of that company. Book value represents the total worth of a company's assets that shareholders would receive if the company were to be liquidated.
  • The book value of an asset is the same as its carrying value on the balance sheet.
  • A company's or asset's book value is frequently less than its market value.

Fundamental analysis makes use of the price-to-book (P/B) ratio and book value per share (BVPS).

Cost Of Equipment : $100,000

Year one Depreciation : $20,000

Year Two Depreciation : $20,000

Book Value after Second year: $100,000-$20,000- $20,000

=$60,000

Hence, $60,000 is the book value of the equipment at the end of the second year.

To learn more about book value, refer to

https://brainly.com/question/23057744

#SPJ4