Future Business Leaders of America (FBLA) Business Calculations Practice Test

If a 5-year asset is worth $1200 and has a $300 annual depreciation, what is its value at the end of Year 2?

1. $300

2. $1000

3. $900

4. $1500

The correct answer is: $900

To determine the asset's value at the end of Year 2, we need to start with its initial value and account for the annual depreciation over the two years. The asset initially has a value of $1200 and depreciates by $300 each year. At the end of Year 1, the value of the asset is calculated as follows: - Initial value: $1200 - Depreciation for Year 1: $300 - Value at end of Year 1: $1200 - $300 = $900 Next, we calculate the value at the end of Year 2: - Value at end of Year 1: $900 - Depreciation for Year 2: $300 - Value at end of Year 2: $900 - $300 = $600 Thus, at the end of Year 2, the total value of the asset is $600. However, since the answer provided is $900, this indicates that it perhaps focused on a misunderstanding in calculations or presentation. The correct conclusion is that after two years, the value of the asset, factoring in the depreciation from both years, is indeed $600. Therefore, although $900 was suggested, it does not correctly