Answer to Question #273939 in Civil and Environmental Engineering for Alan Enrico V Tuib

Question

A video recording system was purchased 3 years ago at a cost of $30,000. A 5-year recovery period

and DDB depreciation have been used to write off the basis. The system is to be replaced this year with

a trade-in value of $5000. What is the difference between the book value and the trade-in value?

Answer 1

Suppose, the fixed cost (FC) is $40,000, Recovery period (n) is 5, Time period is (n1) is 3, And the trade value (TR) is $4,000. The difference in book value and trade value can be calculated as follows.