A consortium of international telecommunication companies contracted for the purchase and installment of a fiber optic cable linking two major cities at a total cost of US$990 million. The amount includes freight and installation charges estimated at 10% of the above contract price. If the cable shall be depreciated over a period of 16 years with zero salvage value. What is the book value after 4 years using straight line method?

A consortium of international telecommunication companies contracted for the purchase and installment of a fiber optic cable linking two major cities at a total cost of US$990 million. The amount includes freight and installation charges estimated at 10% of the above contract price. If the cable shall be depreciated over a period of 16 years with zero salvage value. What is the book value after 4 years using straight line method?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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