Answer to Question #154437 in Financial Math for kris

Question

Kok Kiang Company buys a bus at RM140,000. The useful life of the bus is eight years. If the book value at the end of four years is RM80,000, find the scrap value of the bus at the end of eight years using the straight line method

Answer 1

If the book value at the end of four years is RM80,000, then 140,000 - 80,000 = RM60,000 were depreciated, so RM60,000 more will be depreciated in next 4 years, so the scrap value of the bus at the end of eight years is 80,000 - 60,000 = RM20,000.