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Annual depreciation

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A $100,000 piece of testing equipment was installed and depreciated for 5 years. Each year the end-of-year book value decreased at a rate of 10% of the book value at the beginning of the year. The system was sold for $24,000 at the end of 5 years.
a) Compute the amount of the annual depreciation.

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Annual depreciation= Depreciation rate*Book value

Year 1 = 100000*10%= $10000

Year 2= 90000*10%=$9000

Year 3= 81000*10%=$8100

Year 4= 72900*10%=$7290

Year 5= 65610*10%=$6561
1) Year 1-Book value=$100000
2) Year 2-Book value=$100000-10000=$90000
3) Year 3-Book ...

Solution Summary

This explains the steps to compute Annual depreciation.

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