Thank you for visiting Bill s Wrecker Service has just completed a minor repair on a tow truck The repair cost was 710 and the book value prior to. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
After the work was completed, the book value that should appear on the balance sheet for the tow truck and the building are $6,060 and $92,500 respectively.
The book value refers to the purchase price of an asset, minus accumulated depreciation, and sometimes adjusted for impairment charges. It is also known as the net book value. The book value can be used to determine whether an asset is overpriced compared to the company's market value.Book Value of Tow TruckPrior to the repair, the book value of the tow truck can be calculated by subtracting the accumulated depreciation from the purchase price. Given the accumulated depreciation and the purchase price, the book value is:
Book value of tow truck before repair= $2,680 Since the repair cost was $710, the new book value is: New book value of tow truck = $3,390Book Value of Building Before the roof replacement, the building's book value can be calculated by subtracting the accumulated depreciation from the purchase price. The purchase price is not given, but the difference between the book value and accumulated depreciation is given.
Book value of building before the repair = $48,300The new book value of the building is calculated as follows:
Cost of replacing roof = $6,500
Additional years of useful life = 5
Depreciation per year = $6,500 / 5
= $1,300
New accumulated depreciation = $39,800
New book value of building = $47,000
Therefore, the book value that should appear on the balance sheet for the tow truck and the building are $6,060 and $92,500 respectively.
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