Question

In: Accounting

GDD are considering investing in a new manufacturing machine. The machine would cost £325,000 and have...

  1. GDD are considering investing in a new manufacturing machine. The machine would cost £325,000 and have a useful life of 10 years. The residual value at the end of the 10 years would be £50,000. Calculate the accounting value of the machine for each year of its useful life, using both the straight-line and reducing-balance methods of depreciation. Use a depreciation rate of 15% for the reducing balance method.

Year

Straight-Line Method value

Reducing-Balance Method value

0

£325,000

£325,000

1

2

3

4

5

6

7

8

9

10

There are 20 marks available for this question, one for each calculation. If an early error causes otherwise correctly calculated later answers to be wrong, only the original error reduces the marks.

  1. Which depreciation method would you choose for the manufacturing machine and why? Compare the methods and give at least two reasons for your choice.

There are 5 marks available for this question: 1 for your choice, 4 for the comparison and justifications.

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Expert Solution

pPlease find the answer to the given question in the images uploaded ( 3 images ).

ekkarill92 answered 1 year ago
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