Answer:
$259,000
Explanation:
Data provided in the question:
Cost of equipment = $700,000
Useful life = 5 years
Salvage value = 10% of cost
= 0.10 × $700,000 = $70,000
Now,
Annual depreciation = [Cost - salvage value] ÷ Useful life
= [$700,000 - $70,000 ] ÷ 5
= $126,000
Therefore,
The depreciation expense till December 31, 2021
= Annual depreciation × Life elapsed
= $126,000 × 3.5
= $441,000
Thus,
Book value of Gulf's equipment at December 31, 2021
= Cost - depreciation expense
= $700,000 - $441,000
= $259,000
