Mohr Company purchases a machine at the beginning of the year at a cost of $30,000....

Mohr Company purchases a machine at the beginning of the year at a cost of $30,000. The machine is depreciated using the straight-line method. The machine’s useful life is estimated to be 8 years with a $4,000 salvage value. The book value of the machine at the end of year 2 is:

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Expert Solution

A	Calculation of amount of annual depreciation for the machine :-
	Depreciation expense to be recognized under Straight Line Depreciation Method :-
		Annual Depreciation Expense	=	Depreciable Amount
		Annual Depreciation Expense	=	Useful Life
		Depreciable Amount	=	Cost - Salvage value
		Cost	=	$30,000
		Salvage value (residual value)	=	$4,000
		Useful life	=	8	years
		Depreciable Amount	=	$30,000	-	$4,000
			=	$26,000

		Annual Depreciation Expense	=	$26,000
		Annual Depreciation Expense	=	8 years
			=	$3,250	per year

B	Calculation of Accumulated Depreciation at the end of 2 years:-

	a	Deppreciation for 1st year		$ 3,250
	b	Depreciation for 2nd year		$ 3,250
	c	Accumulated Depreciation at the end of 2 years (a+b)		$ 6,500


	Calculation of book value of the machine at the end of 2 years:-
		Machine (At cost)		$ 30,000
	Less:	Accumulated Depreciation at the end of 2 years (a+b)		$ 6,500
		Book value at the machine at the end of 2 years		$ 23,500

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ekkarill92 answered 1 day ago

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