An underground rock mechanics testing device is to be double declining depreciated. It has a first cost of $25,000 and an estimated salvage of $2,500 after 12 years. (a) What is book value and market value ? (b)Calculate the depreciation and book value for years 1 and 4. (c) Calculate the implied salvage value after 12 years.

An underground rock mechanics testing device is to be double declining depreciated. It has a first cost of $25,000 and an estimated salvage of $2,500 after 12 years. (a) What is book value and market value ? (b)Calculate the depreciation and book value for years 1 and 4. (c) Calculate the implied salvage value after 12 years.

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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An underground rock mechanics testing device is to be double declining depreciated. It has a first cost of $25,000 and an estimated salvage of $2,500 after 12 years.

(a) What is book value and market value ?
(b)Calculate the depreciation and book value for years 1 and 4.
(c) Calculate the implied salvage value after 12 years.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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