Engineering Board Exam Reviewer · Depreciation: Straight Line and Sinking Fund Methods · hard

Using the sinking fund method, find the book value at the end of year 3 for the machine in the previous problem (Cost=P150,000, d P11,381.66/year, i=6%).

1. P113,758.50
2. P115,000.00
3. P110,000.00
4. P108,000.00

Answer

A. P113,758.50

Solution

Accumulated depreciation =d·(1.06)3-1/0.06 11381.66(3.1836) 36,241.50. Book value =150000-36241.50 P113,758.50.

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