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23 April, 07:52

At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. The machine has an estimated useful life of 10 years and estimated residual value of $50,000. Under the straight-line method, how much depreciation would Glass take in 2010 for financial reporting purposes? A. $55,000. B. $60,000. C. $65,000. D. $110,000.

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  1. 23 April, 11:40
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    A. $55,000.

    Explanation:

    The cost of the new machine in 2009 is $600,000

    The residual value was $50,000

    Useful life is ten years

    Under the straight-line depreciation method, the depreciation amount in 2020 will be

    The depreciable amount the machine cost - residual value

    = $600,000 - $50,000

    = $550,000

    The depreciation rate will be 1/10 year x 100 = 10%

    depreciation per year will be 10% x 555,000

    =10/100 x 550,000

    =$55,000

    Depreciation 2010, the second year will $55,000 since the depreciation amount is a constant figure under the straight-line method.
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