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Straight line depreciation questions?

1. Machine costs $20,000

Residual value is $2,000

Estimated life is 5 years

Calculate book value at the end of year 1, assuming twice the straight-line rate

2. Car costs $25,000

Residual value is $5,000

Estimated life is 5 years

After 3 years, car was sold for $11,000

Calculate the difference between book value and selling price, using the straight-line method of depreciation.

1 Answer

Relevance
  • 6 years ago

    Yearly depreciation = (Cost - Residual Value) / Useful Life (this is the straight-line formula)

    Book Value = Cost - Accumulated Depreciation (Year number*yearly depreciation)

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