**Straight Line Depreciation Example**Solve using Straight Line Depreciation:- **Initial Cost**: The cost for buying and installing the machine in the manufacturing system is $16,000.- **Useful Life**: 4 years.- **Salvage Value**: After 4 years, the salvage value of the machine is $4,000.**Objective**: Find the book value and depreciation value.### Explanation:Straight line depreciation involves subtracting the salvage value from the initial cost, then dividing by the useful life to find the annual depreciation.\[\text{Annual Depreciation} = \frac{\text{Initial Cost} - \text{Salvage Value}}{\text{Useful Life}}\]- **Annual Depreciation**: $\frac{16,000 - 4,000}{4} = 3,000$Each year, the machine will depreciate by $3,000.### Book Value Calculation:- **End of Year 1**: Initial Cost - (1 × Annual Depreciation) = $16,000 - $3,000 = $13,000- **End of Year 2**: Initial Cost - (2 × Annual Depreciation) = $16,000 - $6,000 = $10,000- **End of Year 3**: Initial Cost - (3 × Annual Depreciation) = $16,000 - $9,000 = $7,000- **End of Year 4**: Initial Cost - (4 × Annual Depreciation) = $16,000 - $12,000 = $4,000**Key Points**:- The **book value** of an asset is its original cost minus accumulated depreciation.- At the end of its useful life, the book value equals the salvage value.

Name: **Straight Line Depreciation Example**Solve using Straight Line Depre
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Description: **Straight Line Depreciation Example**Solve using Straight Line Depreciation:- **Initial Cost**: The cost for buying and installing the machine in the manufacturing system is $16,000.- **Useful Life**: 4 years.- **Salvage Value**: After 4 years, the

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Solve using Straight Line Depreciation: Initial cost for buying and installing the machine in manufacturing system is $ 16000 and useful life of that is 4 years. After 4 years the salvage value of the machine is $ 4000. Find book value and depreciation value?

Solve using Straight Line Depreciation: Initial cost for buying and installing the machine in manufacturing system is $ 16000 and useful life of that is 4 years. After 4 years the salvage value of the machine is $ 4000. Find book value and depreciation value?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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