Tyrus bought a trailer two years ago in which to transport his bronco horses to rodeos and

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Tyrus bought a trailer two years ago in which to transport his bronco horses to rodeos and other events. The trailer, which had no salvage value, cost him $20,000 and was depreciated by the straight-line method over ten years ($2,000 per year). If he would retire and needed to sell the trailer, Tyrus figures a rancher would pay him about $10,000, but it would cost Tyrus about $100 to place the ad and drive the trailer to whoever bought it. On the other hand, two year-old trailers like the one he owns are selling at used trailer lots for about $15,000. Recently, though, rodeo memorabilia was gaining in popularity and any number of speculators had offered to buy the trailer that had hauled so many famous horses for $12,500.
Tyrus always considered himself a cowboy first and a businessman second and is having trouble deciding what his trailer is worth. Can you help him?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Entrepreneurial Small Business

ISBN: 978-1259573798

5th edition

Authors: Jerome Katz, Richard Green

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