For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. Company A purchased office equipment for $400,000. The functional life is 10 years and the salvage value is 10% of the purchase price. Determine the depreciation amount on the 4th year and the book value at the end of the 3rd year using:Straight Line MethodDouble Declining Balance MethodSum-of-Years Digits MethodDeclining Balance Method with Switchover to SLMACRS GDS (assume that the assets will be disposed of on the 3rd year)

Straight Line Method: Depreciation = (Purchase price - Salvage value)/functional life

Answered: Straight Line Method Double Declining…

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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For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box.

Company A purchased office equipment for $400,000. The functional life is 10 years and the salvage value is 10% of the purchase price. Determine the depreciation amount on the 4^th year and the book value at the end of the 3^rd year using:
1. Straight Line Method
2. Double Declining Balance Method
3. Sum-of-Years Digits Method
4. Declining Balance Method with Switchover to SL
5. MACRS GDS (assume that the assets will be disposed of on the 3^rd year)

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