1. Finances Accounting plays an important role in any business. Why do you think it is important for a business to keep track of its expenses?

2. Lesson Objective Compute the book value of an item using straight-line depreciation. Content Vocabulary book value The approximate value of an item after it has been owned and depreciated for a period of time. accumulated depreciation The total depreciation of an item to date.

4. The law firm of Charles A. Adams purchased a new copier for $1,745. The total resale value after 5 years is estimated to be $245. Using the straight-line method, Charles A. Adams determined that the copier would depreciate $300 per year. What is the book value at the end of each year of depreciation? Example 1

5. Find the accumulated depreciation. Previous Year’s Current Year’s Accumulated Depreciation + Depreciation First Year: $ 0 + $300 = $ 300 Second Year: 300 + 300 = 600 Third Year: 600 + 300 = 900 Fourth Year 900 + 300 = 1,200 Fifth Year: 1,200 + 300 = 1,500 Example 1 Answer: Step 1

6. Find the book value. Original Cost – Accumulated Depreciation First Year: $1,745 – $ 300 = $1,445 Second Year: 1,745 – 600 = 1,145 Third Year: 1,745 – 900 = 845 Fourth Year: 1,745 – 1,200 = 545 Fifth Year: 1,745 – 1,500 = 245 Note: The book value of the last year always equals the salvage value. Example 1 Answer: Step 2

7. A new bedroom set costs $15,600. The salvage value is $1,200 after 5 years. Using the straight-line method, what is the book value at the end of 3 years? Practice 1

8. $6,960 Practice 1 Answer