A firm purchases a piece of equipment for 56,000. It is to be depreciated using the reducing

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A firm purchases a piece of equipment for £56,000. It is to be depreciated using the reducing balance method at a rate of 25 per cent.

(a) What would be the net book value of this asset on the balance sheet at the end of the equipment’s third year in use in the business?

(b) What would the net book value have been if the straight-line method of depreciation had been used instead?

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