TB MC Qu. 08-176 Martin Company purchases a machine a...Martin Company purchases a machine at the beginning of the year at a cost of$60,000. The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.The machine's book value at the end of year 3 is:

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Asked Nov 21, 2019
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TB MC Qu. 08-176 Martin Company purchases a machine a...
Martin Company purchases a machine at the beginning of the year at a cost of
$60,000. The machine is depreciated using the double-declining-balance method.
The machine's useful life is estimated to be 4 years with a $5,000 salvage value.
The machine's book value at the end of year 3 is:
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TB MC Qu. 08-176 Martin Company purchases a machine a... Martin Company purchases a machine at the beginning of the year at a cost of $60,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 4 years with a $5,000 salvage value. The machine's book value at the end of year 3 is:

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Expert Answer

Step 1

Determine double declining depreciation rate

Double declining depreciation rate - (100/4 years)x 2 =50%
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Double declining depreciation rate - (100/4 years)x 2 =50%

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Step 2

Determine machine book value ...

Beginning Depreciation
book value expense (B)depreciation (C) =|
(A)
$60,000
$30,000
$15,000
$7,500
Ending book
value (D)
Accumulated
(B) +Previous (C) Previous (D)- (B)
(A) x 50%
$30,000
$15,000
$7,500
$2,500
$30,000
$45,000
$52,500
$55,000
$30,000
$15,000
$7,500
$5,000
Year 1
Year 2
Year 3
Year 4
Machine's book value at the end of the year 3 is $7,500.
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Beginning Depreciation book value expense (B)depreciation (C) =| (A) $60,000 $30,000 $15,000 $7,500 Ending book value (D) Accumulated (B) +Previous (C) Previous (D)- (B) (A) x 50% $30,000 $15,000 $7,500 $2,500 $30,000 $45,000 $52,500 $55,000 $30,000 $15,000 $7,500 $5,000 Year 1 Year 2 Year 3 Year 4 Machine's book value at the end of the year 3 is $7,500.

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