Question

Holly, Inc. has a building that originally cost $465,000. Holly expects to be able to sell the facility for $308,000 at the end of its useful life. The balance of the related Accumulated Depreciation account is $115,000. The residual value of the facility is:

• $193,000.

• $308,000.

• $157,000.

• $350,000.

Answer 1

Deprerciation is calculated as follows by using the following formula:

Depreciation p.a = (Originally cost - Residual value) / Useful Life

Depreciation is the reduction in the value of assets due to wear and tear or any other reasons.

Residual value is the estimated value at the end of the useful life of assets or expected resale value at the end of it's useful life.It is also known as ' Salvage value' or Scrap Value'.

So It is given that company expects to be able sell the facility for $308,000 at the end of its useful life.

So, the residual value of the facility = $308,000

So correct answer is option (2) or $308,000