The following are the cost of a system and the useful life is five years. The salvage value for depreciation purpose is equal to 25% of the hardware cost Item Hardware Training Installation Cost $170,000 $18,000 $18,000 a) What is the book value of the system at the end of year three if Straight line method is used? b) Suppose that after depreciation of the system for two years with straight line, the company decides to switch to the decline method for the reminder of the system life (depreciation rate 30%). What is the system Book Value at the end of four years?
The following are the cost of a system and the useful life is five years. The salvage value for depreciation purpose is equal to 25% of the hardware cost Item Hardware Training Installation Cost $170,000 $18,000 $18,000 a) What is the book value of the system at the end of year three if Straight line method is used? b) Suppose that after depreciation of the system for two years with straight line, the company decides to switch to the decline method for the reminder of the system life (depreciation rate 30%). What is the system Book Value at the end of four years?
Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
5th Edition
ISBN:9781305084766
Author:Saeed Moaveni
Publisher:Saeed Moaveni
Chapter20: Engineering Economics
Section: Chapter Questions
Problem 25P
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Question
![The following are the cost of a system and the useful life is five years. The
salvage value for depreciation purpose is equal to 25% of the hardware
cost
Item
Hardware
Training
Installation
Cost
$170,000
$18,000
$18,000
a) What is the book value of the system at the end of year three if Straight line
method is used??
b) Suppose that after depreciation of the system for two years with straight
line, the company decides to switch to the decline method for the reminder of
the system life (depreciation rate 30%). What is the system Book Value at the
end of four years?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F55122069-fd1a-4bce-94a6-41be6576e698%2Fecc170fd-21f6-43a7-83fd-9b707fc5a3b8%2F8lz4eih_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following are the cost of a system and the useful life is five years. The
salvage value for depreciation purpose is equal to 25% of the hardware
cost
Item
Hardware
Training
Installation
Cost
$170,000
$18,000
$18,000
a) What is the book value of the system at the end of year three if Straight line
method is used??
b) Suppose that after depreciation of the system for two years with straight
line, the company decides to switch to the decline method for the reminder of
the system life (depreciation rate 30%). What is the system Book Value at the
end of four years?
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