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29 March, 21:37

Ellen's Antiques reported the following in its December 31, 2021, balance sheet: Equipment $ 4,000,000 Accumulated depreciation-equipment $ 3,150,000 In a disclosure note, Ellen's indicates that it uses straight-line depreciation over eight years and estimates salvage value at 10% of cost.

Required: Compute the average age of Ellen's equipment at 12/31/2020.

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  1. 29 March, 21:43
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    Answer:7 years

    Explanation:

    Depreciation per annum

    Cost - salvage value / no of years

    $4,000,000-400,000/8

    = $450,000

    Accumulated depreciation = depreciation per annum * no of year

    Therefore no of years

    = Cross multiply

    Accumulated depreciation / depreciation per annum

    =$ 3,150,000/$450,000

    = 7 years.
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