Answered! The Digby Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. and The expected salvage value at the end of 15 years is $4,090,000. What will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (Use FASB GAAP) Select: 1 Save Answer $29,448,000 $35,446,667 $33,538,000 $32,720,000 Include calculation please Show transcribed image text The Digby Company has just purchased exist40, 900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is exist4, 090,000. What will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (Use FASB GAAP) Select: 1 exist29, 448,000 exist35, 446, 667 exist33, 538,000 exist32, 720,000 Expert Answer Anonymous Anonymous answered this Was this answer helpful? 1 0 326 answers Answer is $33538000 Original purchase cost = $40900000 Estimated useful life = 15 years Salvage value at the end of 15 years = $4090000 Annual depriciation using the streight line method = (original purchase cost – salvage value) / estimated useful life =(40900000 – 4090000) / 15 = 36810000 / 15 = $2454000 Cumulative depriciation after the third year = $2454000 X 3 = $7362000 Book value after third year of use = Original purchase cost – Cumulative depticiation = $40900000 – $7362000 = $33538000…

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