A firm bought an equipment for P56,000. Other expenses including installation amounted to P4,000. The equipment is expected to have a life of 16 years with a salvage of 10 percent of the original cost. Determine the book value at the end of 12 years by (a) the straight line method and (b) sinking fund method at 12% interest.
A firm bought an equipment for P56,000. Other expenses including installation amounted to P4,000. The equipment is expected to have a life of 16 years with a salvage of 10 percent of the original cost. Determine the book value at the end of 12 years by (a) the straight line method and (b) sinking fund method at 12% interest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A firm bought an equipment for P56,000. Other expenses including installation amounted to P4,000. The equipment is expected to have a life of 16 years with a salvage of 10 percent of the original cost. Determine the book value at the end of 12 years by (a) the straight line method and (b) sinking fund method at 12% interest.
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