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Maddie Co.purchased a machine on January 1, 2011 for $22,500.The machine had an estimated useful life of 10 years and an estimated residual value of $2,500.The company uses double-declining-balance amortization.
-If Maddie Co.used the straightline method of amortization what would the carrying value of the machine be at the end of 2011?
A)$20,500
B)$20,250
C)$18,250
D)$18,000

Question

Quizplus · Accepted Answer

The straight-line method calculates depreciation as (Cost - Residual Value) / Useful Life. For 2011, it would be ($22,500 - $2,500) / 10 = $2,000. The carrying value at the end of 2011 is $22,500 - $2,000 = $20,500.

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