Answered: methods. What do you observe from the…

Business

Accounting

methods. What do you observe from the results?Explain. A.) Straight Line Method B.) Sinking Fund Method

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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Question

Engr. Cruz bought a gantry machine for erecting tall structures. It was invoiced from Japan including its cost, insurance and freight at 4,050,000. Brokerage, bank, other fees and duties, and permits amount to 150,000. At the end of 10 years, he expects to sell it at 90,000. The working hours of the gantry machine is 130,000 hours. At 12% interest rate, compare the book value at the end of 6 years by computing for it using the following methods. What do you observe from the results?Explain.

A.) Straight Line Method

B.) Sinking Fund Method

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