Ask Question
1 April, 12:52

A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of four years. The company uses straight-line depreciation. Calculate its book value at the end of year 3What is the Book Value? A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of 20,000 machine hours. The company uses units-of-production depreciation and ran the machine 3,000 hours in year 1, 8,000 hours in year 2, and 6,000 hours in year 3. Calculate its book value at the end of year 3. A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of four years. The company uses double-declining-balance depreciation. Calculate its book value at the end of year 3.

+2
Answers (1)
  1. 1 April, 14:06
    0
    Answer: $130,000

    $205,600

    $50,000

    Explanation:

    Depreciation expense using the straight line depreciation method = (Original cost of asset - Salvage value) / useful life

    Depreciation expense = ($400,000 - $40,000) / 4 = $90,000

    Net book value for year 1 = $400,000 - $90,000 = $310,000

    Net book value for year two = $310,000 - $90,000 = $220,000

    Net book value for year 3 = $220,000 - $90,000 = $130,000

    Deprecation expense using the unit of production method = [ (Original cost of asset - Salvage value) / total estimated productive capacity] * actual productive use of asset

    ($400,000 - $40,000) / 20,000 = $18

    Depreciation expense for year 1 = $18 * 3000 = $54,000

    Net book value for year 1 = $400,000 - $54,000 = $346,000

    Depreciation expense for year 2 = $18 * 1800 = $32,400

    Net book value for year two = $346,000 - $32,400 = $313,600

    Depreciation expense for year 3 = $18 * 6000 = $108,000

    Net book value for year three = $313,600 - $108,000 = $205,600

    In the double declining method = 2 * (1/number of years) = 2 * (1:4) = 0.5

    Deprecation expense using the double declining method = 0.5 * net book value

    Depreciation expense for year 1 = 0.5 * $400,000=$200,000

    Net book value for year 1 = $400,000 - $200,000=$200,000

    Depreciation expense for year two = $200,000 * 0.5 = $100,000

    Net book value for year two = $200,000 - $100,000 = $100,000

    Depreciation expense for year 3 = $100,000 * 0.5 = $50,000

    Net book value for year three = $100,000 - $50,000 = $50,000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful life of four years. The company uses ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers