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9 June, 14:54

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $483,000, has an estimated useful life of 10 years and an estimated residual value of $63,000. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?

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  1. 9 June, 15:22
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    Answer: $42,000

    Explanation:

    Using a straight line Depreciation method means that the Equipment will be depreciated uniformly throughout it's life. i. e by the same amount.

    Depreciation = (Cost - Residual Value) / Useful Life

    = (483,000 - 63,000) / 10

    = 420,000/10

    = $42,000

    The annual Depreciation amount for Year 1 - 3 is $42,000 and will be the same as long as the Equipment is in service.
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