Question:
A company purchases office equipment for $12,000 on January 1, 2024. The equipment has an estimated salvage value of $2,000 and a useful life of 5 years.
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Using the straight-line method, calculate:
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(a) The annual depreciation expense.
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(b) The book value of the equipment at the end of the third year.
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If the company uses the reducing balance method with a depreciation rate of 40%, calculate the book value at the end of the second year.
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