Martha buys a duplicating machine for $20,000 with a residual value of 2,000. the estimated life is five years. what is the book value at the end of year 1, assuming the straight line method. please explain the answer. thank you
Answers
Answered by
0
Asset value : 20 ,000
Life time = 5 years = n years
Scrap value or residual value = 2 000
Straight line depreciation rate = (20 000 - 2000) * 100 / (20 000 * 5) = 18 %
depreciation at the end of 1 year = 18 % of 20 000 = 3 600
Value at the end of year 1 : 20 000 - 3 600 = 16 400
Life time = 5 years = n years
Scrap value or residual value = 2 000
Straight line depreciation rate = (20 000 - 2000) * 100 / (20 000 * 5) = 18 %
depreciation at the end of 1 year = 18 % of 20 000 = 3 600
Value at the end of year 1 : 20 000 - 3 600 = 16 400
Similar questions