Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 4: Problem 117

If a machine costs initially $$\$ 1,000,000,$$ lasts for 10 years, and has a scrap value of $$\$ 100,000$$ at the end of its lifetime, how much depreciation should be taken into account each year in the current accounts? And how is this

Short Answer

Expert verified
The annual depreciation for the machine is $90,000 using the straight-line depreciation method.

Step by step solution

01

Determine the total depreciation

The total depreciation is the difference between the initial cost and the scrap value of the machine. Therefore, we have: Total Depreciation = Initial Cost - Scrap Value
02

Calculate the total depreciation

Using the given values, Total Depreciation = \(1,000,000 - \)100,000 = $900,000
03

Calculate the annual depreciation

As the machine lasts for 10 years, we will divide the total depreciation by the number of years to find the annual depreciation: Annual Depreciation = Total Depreciation / Lifetime
04

Determine the annual depreciation

Using the values, Annual Depreciation = \(900,000 / 10 = \)90,000 Thus, the depreciation that should be taken into account each year in the current accounts is $90,000.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Given the following figures: $$ \begin{array}{ll} \text { Total income } & \frac{\text { Year } 1}{\$ 400 \text { billion }} & \frac{\text { Year } 6}{\$ 550 \text { billion }} \\ \text { Price index } & 1.00 & 1.00 \end{array} $$ find the increase in real income from Year 1 to Year \(6 .\)

State the importance of national income accounting.

Given the following national income accounting data, compute GNP, NNP and NI (all figures are in billions). \(\begin{array}{lc}\text { - Compensation of employees } & 195.6 \\ \text { - U.S. exports of goods and services } & 14.5 \\ \text { - Capital consumption allowance } & 12.3 \\ \text { - Government purchases of goods and services } & 60.6 \\ \text { - Indirect business taxes } & 13.1 \\ \text { - Net private domestic investment } & 63.4 \\ \text { - Transfer payments } & 14.2 \\\ \text { - U.S. imports of goods and services } & 17.8 \\ \text { - Personal taxes } & 43.0 \\ \text { - Personal consumption expenditures } & 230.9\end{array}\)

What is the difference between gross national product and national income?

What are 'withdrawals' from, and 'injections' into the income -expenditure flow?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free