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3 December, 06:14

A machine was purchased for $180,000 and it was estimated to have an $12,000 salvage value at the end of its useful life. Monthly depreciation expense of $1,400 was recorded using the straight-line method. The annual depreciation rate isa. 12%. b. 2%. c. 8%. d. 10%.

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  1. 3 December, 06:31
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    Answer: The answer is d 10%

    Explanation:

    Rate = Annual depreciation / Cost of Asset

    Cost = $180,000 Salvage value at the end of the useful life of the machine = $12,000

    Since we are given monthly depreciation, we multiply it by 12 to get the annual depreciation

    =1,400*12=16,800

    We subtract the salvage value from cost to know the real cost of the machine at the end of the useful life

    180,000-12,000=168,000

    Therefore to calculate rate

    = Annual depreciation / Cost of the machine

    = 16,800/168,000

    = 0.1 * 100

    =10%

    Therefore the annual depreciation rate is 10%
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