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depreciation expense: declining-balance

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Millco, Inc., acquired a machine that cost $410,000 early in 2013. The machine is expected to last for ten years, and its estimated salvage value at the end of its life is $61,000.

a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate the accumulated depreciation after the sixth year of the machine's life.

Depreciation expense =
Accumulated depreciation =

b. Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense for the third year of the machine's life.

Depreciation expense

c. What will be the net book value of the machine at the end of its ten year of use before it is disposed of, under each depreciation method?

Straight-line depreciation
Declining-balance depreciation

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Solution Summary

This solution would explain the calculation of depreciation expense, accumulated depreciation under straight line and declining balance method.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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