On April 2, Year 1, Genie, Incorporated acquired a new piece of filtering equipment. The cost of the equipment was $160,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 4 years. Genie uses a calendar year-end for financial reporting.

If Genie uses straight-line depreciation with the half-year convention, the book value of the equipment at December 31, Year 2 will be

1. $90,000
2. $105,000
3. $106,667
4. $107,500