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27 June, 07:29

Mohr company purchases a machine at the beginning of the year at a cost of $23,000. the machine is depreciated using the double-declining-balance method. the machine's useful life is estimated to be 5 years with a $8,000 salvage value. the machine's book value at the end of year 2 is:

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  1. 27 June, 10:08
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    By double-declining method;

    Depreciation expense = 2 * (1/life) * Book value at begging of the year

    Year 1:

    Book value = $23,000

    Depreciation = 2 * (1/5) * 23000 = $9200

    Year 2:

    Book value = 23000-Depreciation in year 1 = 23000-9200 = $13,800

    Depreciation = 2 (1/5) * 13800 = $,5,520

    Book value at the end of year 2 = Book value at beginning - depreciation = 13800 - 5520 = $8,280
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