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    straight-line method of depreciation and financial statements

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    A machine with a useful life of 6 years and a residual value of $3,000 was purchased at the beginning of year 1 for $30,000. The machine was sold for $15,000 on April 1 in year 4.

    (a) What was the book value of the equipment at the end of year 3 assuming the straight-line method of depreciation is used?

    (b) Illustrate the effects on the accounts and financial statements of the depreciation from January 1 to April 1 of year 4.

    (c) Illustrate the effects on the accounts and financial statements of the sale of the machine on April 1.

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    https://brainmass.com/business/depreciation/straight-line-method-depreciation-financial-statements-446871

    Solution Preview

    Depreciation Expense Per Year = (30,000 - 3,000)/6 = 4,500

    (a)
    Book Value at the end of Year 3 = 30,000 - 4,500*3 = 16,500

    (b)
    Jan 1 through Apr 1 ...

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