Compute Depreciation with SL and DDB methods
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Lone Star Sales & Service acquired a new machine that cost $42,000 in early 2008. The machine is expected to have a five-year useful life and is estimated to have a salvage value of $7,000 at the end of its life. (Round your final answers to the nearest dollar).
(a) Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the second year of the machine's life and calculate the accumulated depreciation after the third year of the machine's life.
(b) Using the double declining balance depreciation method, calculate the depreciation expense for the first year of the machine's life and the net book value of the machine at this point in time.
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Solution Summary
A template for analyzing depreciation methods is given as well as the process for getting the answer.
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