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A company bought a new machine for its warehouse on January 1:
Paid $10,00 in cash
Financed the rest of the purchase via a $30,000 5 year note
Incurred a separate $2,000 setup charge

Monthly depreciation is $500 ($6,000 annual).

What’s the book value of the new machine on December 31?
A. 9500
B. 24000
C. 34000
D. 36000

Sagot :

The book value of the new machine is $36,000.

What is depreciation?

Depreciation is the decline in the value of an asset as a result of wear and tear. The methods used to calculate depreciation includes:

  1. Straight line method
  2. Activity method
  3. Double declining method.

What is the book value?

The book value is the total cost of the asset less depreciation.

Total cost = 10,000 + 30,000 + 2,000 = $42,000

book value = $42,000 - 6000 = $36,000

To learn more about depreciation, please check: https://brainly.com/question/25552427

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