Question

On September 1, 2011, a company purchased a weaving machine for $239,800. The machine has an estimated useful life of 8 years and an estimated residual value of $17,800. Additionally, it is estimated that the machine would produce 740,000 bolts of woven fabric over its useful life. The company ended up selling the machine in 2018 after 1 month of use.

The following budgeted and actual activity levels were provided to support your work:

  

Assuming the company uses the straight line depreciation method, select the answer below that shows the machine's net book value at 12/31/2013

Answer 1

cost of machine		239800
residual value		17800
value to be depreciated		222000
life of equipment		8 Years
Annual depreciation	(222000/8)	27750
Year	Gross value of equipment	annual depreciation	accumulated deprecition	Year end book value = gross value of equipment-accumulated depreciation
sep 1 2011	239800			239800
Dec 31 2011	239800	9250	9250	230550
dec 31 2012	239800	27750	37000	202800
Dec 31 2013	239800	27750	64750	175050
Net book value at dec 31 2013	175050