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13 August, 19:19

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years. What is the assets book value at the end of year 3?

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  1. 13 August, 21:40
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    Book value = original cost - accumulated depreciation

    = $56,000 - $30,600

    =$25,400
  2. 13 August, 22:02
    0
    =$25,400

    Explanation:

    The cost of the compute was $56,000

    The residual value was 5000

    Useful life is 5 years

    Using the straight-line depreciation method, book value after three years will be

    The depreciable amount will be the asset cost value - residual value

    = $56,000 - $5000

    = $51,000

    The depreciation rate will be 1/5 year x 100 = 20%

    depreciation per year will be 20% x 51,000

    = 20/100 x 51,000

    =$10,200

    Depreciation for three years will be $10,200 x 3 = $30,600

    The book value after 3 years:

    Book value = original cost - accumulated depreciation

    = $56,000 - $30,600

    =$25,400
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