Question
In: Accounting
Company A purchases a machine for GBP 8384 and intends to use it for 10 years....
Company A purchases a machine for GBP 8384 and intends to use it for 10 years. The company expects no residual value at the end of the usage time ( GBP 0) and uses straight-line depreciation. Calculate the book value of the machine at the end of year 2.
Select one:
8384
6707
None of the other answers is correct.
4192
Solutions
Expert Solution
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| Company A | Note | |
| Straight line method | Amount $ | |
| Cost of asset | 8,384.00 | See A |
| Less: Residual Value | - | B |
| Depreciable Value | 8,384.00 | C=A-B |
| Useful life | 10.00 | D |
| Annual depreciation expense | 838.40 | E=C/D |
| Depreciation expense for year 1 | 838.40 | F= See E |
| Depreciation expense for year 2 | 838.40 | G= See E |
| Book value at the end of year 2 | 6,707.00 | H=A-F-G |
| So answer is 6,707. |
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