A company bought a machine for BD 250,000 which has a useful life of 10 years and can be sold for BD50,000 at the end of its useful life. In addition, the cost of installing the machine is BD25,000 while the cost of dismantling is BD 7,500. Determine the accumulated depreciation and book value at the end of 8th year using sinking fund if interest is 12%. a. At the end of Year 8 the Book Value of Machine is BD 112,044 and the Accumulated Depreciation is BD 162,956. b. At the end of Year 8 the Book Value of Machine is BD 100,551.44 and the Accumulated Depreciation is BD 115,948.56. c. At the end of Year 8 the Book Value of Machine is BD 200,551.44 and the Accumulated Depreciation is BD 220,948.56. d. At the end of Year 8 the Book Value of Machine is BD 130,551.44 and the Accumulated Depreciation is BD 170,948.56.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
A company bought a machine for BD 250,000 which has a useful life of 10 years and can be sold for BD50,000 at the end of its useful life. In addition, the cost of installing the machine is BD25,000 while the cost of dismantling is BD 7,500. Determine the
At the end of Year 8 the Book Value of Machine is BD 112,044 and the Accumulated Depreciation is BD 162,956.
At the end of Year 8 the Book Value of Machine is BD 100,551.44 and the Accumulated Depreciation is BD 115,948.56.
At the end of Year 8 the Book Value of Machine is BD 200,551.44 and the Accumulated Depreciation is BD 220,948.56.
At the end of Year 8 the Book Value of Machine is BD 130,551.44 and the Accumulated Depreciation is BD 170,948.56.
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