Question

In: Economics

"You purchase a machine. It costs $47,000 to purchase, $8,000 to install, and $6,000 for its...

"You purchase a machine. It costs $47,000 to purchase, $8,000 to install, and $6,000 for its freight with a 7-year life. Use the DDB method (multiplier 2) switching to straight line depreciation if appropriate. Salvage value is $13,000. Determine the book value at the end of year 3."

Solutions

Expert Solution

Total Cost of product =  $47,000 + $8,000 + $6,000 = $61,000

Salvage Value = $13,000

Life of the Asset = 7 year  

Accumulated Depreciation = (Cost of Asset - Salvage Value / Life of the Asset ) X No. of Years

= ($61,000 - $13,000 / 7 ) X 3

= $20,571.42

Net Book Value at the end of year 3 = Original Cost - Accumulated Depreciation

= $61,000 - $20,571.42

= $40,428.58 = ~ $40,428

Rahul Sunny answered 2 years ago
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