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Answer all questions regarding to the case. Case 7-1: Use the information below to answer Questions 1-4 A business purchased a machine that had a
Answer all questions regarding to the case. Case 7-1: Use the information below to answer Questions 1-4 A business purchased a machine that had a total cost of $550,000 and a residual value of $35,000. The asset is expected to service the business for a period of 10 years or produce a total of 1,980,000 units. The machine was purchased January 1st of the current year and has been in service one complete year. 1. Refer to Case 7-1. What is the depreciable cost of the asset? A. S 35,000 B. $550,000 C. $515,000 D. $55,000 2. Refer to Case 7-1. Using the straight-line method, what is the amount of depreciation expense in year two of the asset's life? A. 51,500 B. $103,000 C. 55,000 D. $110,000 3. Refer to Case 7-1. Now assume the business uses the units-of-production method. If the asset produces 500,000 units in year one and 400,000 units in year two, what is book value at the end of year two? (Round your calculation of depreciation per unit to the closest cent.) A. $234,000 B. S316,000 C. $298,000 D. $252,000 Refer to Case 7-1. What is the depreciation expense in year one, if the double-declining- balance method is used? A. 55,000 B. $110,000 C. $103,000 D. S 51,500 4. 7-1
Answer all questions regarding to the case.
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