A unit of welding machine costs P48,500 with an estimated life of 5 years. Its salvage...

A unit of welding machine costs P48,500 with an estimated life of 5 years. Its salvage value is P2.000.00. Find its book value after 2 years by sinking fund method if the
rate is 8% annually.
*CASH FLOW Diagram Needed

Expert Solution

Sinking Fund Method
Annual depreciation (A) = [ (Cost-Salvage) (interest rate) ] / [ (1 + interest rate)^(number of year) -1 ]
Total depreciation after x years = Annual depreciation [(1 + interest rate)^x - 1] / interest rate

Cost	48500
Salvage Value	2000
Life	5 years
X year	2	Year for which total depreciation required
Interest Rate	8%
Book value=Cost -Total depreciation till date

Annual depreciation	7,926.23	=((48500-2000)*8%)/((1+8%)^(5)-1)
Total Depreciation	16,486.55	=7926.23*((1+8%)^2-1)/8%
Book value after 2 years	32,013.45	=48500-16486.55

Year	Cashoutflow
1	7,926.23
2	7,926.23
3	7,926.23
4	7,926.23
5	7,926.23

ekkarill92 answered 1 month ago

A machine costs Rs. 10,000 with useful life of 5 years. It has a salvage value...

A machine costs Rs. 10,000 with useful life of 5 years. It has a salvage value of Rs. 2,000 at the end of its useful life. The machine is expected to generate the following cash flows; Year Cash Flow (PKR) 1 5,000 2 6,000 3 8,000 4 6,500 5 4,000 Calculate Accounting Rate of Return? Tax is applied at 30% per annum. Why Accounting Rate of Return is not among the favorite methodology to evaluate a project? In what circumstances...

On June 1, a machine costing $660,000 with a 5-year life and an estimated $50,000 salvage...

On June 1, a machine costing $660,000 with a 5-year life and an estimated $50,000 salvage value was purchased. It was also estimated that the machine would produce 200,000 units during its life. Actual production would be 40,000 units per year for all five years. 1. Using the depreciation template provided, determine the amount of depreciation expense for the third year under each of the following assumptions: 1.The company uses the straight-line method of depreciation. 2.The company uses...

A new machine costs $120,000, has an estimated useful life of five years and an estimated...

A new machine costs $120,000, has an estimated useful life of five years and an estimated salvage value of $15,000 at the end of that time. It is expected that the machine can produce 210,000 widgets during its useful life. The New Times Company purchases this machine on January 1, 2017, and uses it for exactly three years. During these years the annual production of widgets has been 80,000, 50,000, and 30,000 units, respectively. On January 1, 2020, the machine...

7-5 A machine costing $211,400 with a four-year life and an estimated $15,000 salvage value is...

7-5 A machine costing $211,400 with a four-year life and an estimated $15,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 491,000 units of product during its life. It actually produces the following units: 121,600 in 1st year, 123,900 in 2nd year, 120,800 in 3rd year, 134,700 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not...

A machine costs 40000 and it is estimated that it will be used for for 5...

A machine costs 40000 and it is estimated that it will be used for for 5 years.The estimated salvage value is 8,000 for this purchase. If the straight line depreciation is used, what will the remaining book value balance at the end of year 4? (Note: Find Bn remaining balance after calculating the annual deprecation allowance) Select one: a. 10000 b. 8000 c. 11000 d. 16000 e. 18000 f. 14400

Daniels company purchased a machine for $100000. Useful life 5 years(book and tax) no salvage value....

Daniels company purchased a machine for $100000. Useful life 5 years(book and tax) no salvage value. Record depreciation for 5 yaers using straight line, double declining balance, MACRS

A machine costing $214,800 with a four-year life and an estimated $20,000 salvage value is installed...

A machine costing $214,800 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 487,000 units of product during its life. It actually produces the following units: 121,800 in 1st year, 122,600 in 2nd year, 121,500 in 3rd year, 131,100 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted....

A machine costing $213,200 with a four-year life and an estimated $16,000 salvage value is installed...

A machine costing $213,200 with a four-year life and an estimated $16,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 493,000 units of product during its life. It actually produces the following units: 122,600 in Year 1, 122,500 in Year 2, 120,100 in Year 3, 137,800 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted....

A machine costing $213,800 with a four-year life and an estimated $19,000 salvage value is installed...

A machine costing $213,800 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 487,000 units of product during its life. It actually produces the following units: 121,700 in 1st year, 123,800 in 2nd year, 121,100 in 3rd year, 130,400 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted....

A machine costing $209,200 with a four-year life and an estimated $18,000 salvage value is installed...

A machine costing $209,200 with a four-year life and an estimated $18,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 478,000 units of product during its life. It actually produces the following units: 123,000 in 1st year, 124,100 in 2nd year, 121,200 in 3rd year, 119,700 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted....

Question