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11 August, 07:52

The baldwin company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. the expected salvage value at the end of 15 years is $4,090,000. what will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (use fasb gaap) select: 1save answer $33,538,000 $35,446,667 $32,720,000 $29,448,000

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  1. 11 August, 10:45
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    To get the book value (BV) at the end of 3rd year, let us determine 1st the depreciation:

    depreciation = ($40,900,000 - $4,090,000) / 15 years

    depreciation = 2,454,000 / year

    The reduction after 3 years is:

    depreciation (3years) = ($2,454,000 / year) * 3 years

    depreciation (3years) = $7,362,000

    Therefore BV after 3 years is:

    BV = $40,900,000 - $7,362,000

    BV = $29,448,000
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