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Troyanec [42]
3 years ago
15

Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a

residual value of $5,000 at the end of four years.
Using the straight-line method, depreciation for 2019 and book value at December 31, 2019, would be:a. $10,000 and $20,000
b. $10,00 an $25,000
c. $11,250 and $17,500
d. $11,250 and $22,500
Business
1 answer:
yuradex [85]3 years ago
8 0

Answer:

b. $10,000 and $25,000

Explanation:

For computing the the book value of an asset , first we have to determine the depreciation expense which is shown below"

So, under the straight-line method, the depreciation expense would be

= (Original cost - residual value) ÷ (useful life)  

= ($45,000 - $5,000) ÷ (4 years)  

= ($40,000) ÷ (4 years)  

= $10,000  

For two years, the depreciation would be

= $10,000 × 2 years

= $20,000

In this method, the depreciation is same for all the remaining useful life

Now the book value would be

= Acquired value of an asset - accumulated depreciation  

= $45,000 - $20,000

= $25,000

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