00 VODAFONE TR3G 14:57 ieu.blackboard.com Izmir University of Economics Departme
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00 VODAFONE TR3G 14:57 ieu.blackboard.com Izmir University of Economics Department of Business (BA221/BA215) Financial Accounting/Accounting Take Home Midterm Exam December 12, 2017 NAME/SURNAME: STUDENT ID: *w *t E* Q.1.(20 POINTS) On January 1, 2012 Holly Company purchased a machinery for $140,000. Estimated the salvage value of the machinery $20.000 and economic life 10 yrs. If company uses "straight line method of depreciation method", what is the net book value of the machinery as of December 31, 2016? ,achine, the anyExplanation / Answer
Depreciation per year = ( Purchase price - Salvage value) / Economic life
Depreciation per year = ( $ 140,000 - $ 20,000) / 10
Depreciation per year = $ 12,000
First year depreciation = $ 12,000
Book value at January 1 2013 = 140,000 - 12,000
Book value at January 1 2013 = 128,000
Book value at January 1 2014 = 128000 - 12000
Book value at January 1 2014 = 116,000
Book value at January 1 2015 = 104,000
Book value at January 1 2016 = 92,000
Book value at December 31 2016 = 92,000 - (364/365) x 12,000
Book value at December 31 2016 = $ 80,032.88
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