Question

In: Finance

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

Expert Solution

SL dep. = (C – S value) / Years

= (40,000 – 8,000) / 5

= 32,000 / 5

= 6,400

Total dep. = SL dep. × 4 years

= 6400 × 4

= 25,600

Remaining BV balance = Cost – Total dep.

= 40,000 – 25,600

= 14,400 (Answer)

This could be cross-checked as below:

Remaining BV balance = Remaining SL dep. For last 1 year + Salvage value

= 6,400 + 8,000

= 14,400 (matched with the above answer)

Answer: f

jeff jeffy answered 1 year ago

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