Question

In: Accounting

A man bought a machine for P66,463 six years ago. It has a salvage value of...

A man bought a machine for P66,463 six years ago. It has a salvage value of P11,373 four years from now. He sold it now for P12,930. What is the sunk cost or the value of the machine that the man lost if the depreciation method used is a Straight-Line method?

Solutions

Expert Solution

value of the asset six years ago = 66463

total life of the asset = 10 years

depreciation of the asset under straight line method = 66463/10= 6646.3 per annum

value of the asset after six years = 66463- (6646.3*6)=66463-39877.8 = 26585.2

salvage value after six years = 11373

realisable value of the asset =26585.5-11373 =15212.2

machine sold at the sixth year at = 12930

so the value of the machine that the man lost is , 15212.2-12930 =2282.2

Answer = P2282.2

ekkarill92 answered 2 years ago
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