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14 April, 02:59

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

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  1. 14 April, 04:44
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    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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