A machine worth $10,000 new and having a scrap value of $1000 is to be depreciated linearly over an 18-year life. What will be the value of the machine after 9 years?
5500
well, 9 is half of 18, so ...
To find the value of the machine after 9 years, we can use linear depreciation.
First, we need to calculate the depreciation expense per year. The difference between the initial value ($10,000) and the scrap value ($1,000) is $9,000. This amount will be depreciated evenly over the 18-year life of the machine.
Depreciation expense = (Initial value - Scrap value) / Life
Depreciation expense = $9,000 / 18 years
Depreciation expense = $500 per year
Next, we can calculate the accumulated depreciation after 9 years using the formula:
Accumulated depreciation = Depreciation expense * Number of years
Accumulated depreciation = $500/year * 9 years
Accumulated depreciation = $4,500
To find the value of the machine after 9 years, we subtract the accumulated depreciation from the initial value:
Value after 9 years = Initial value - Accumulated depreciation
Value after 9 years = $10,000 - $4,500
Value after 9 years = $5,500
Therefore, the value of the machine after 9 years will be $5,500.
To calculate the value of the machine after 9 years of depreciation, you need to determine the annual depreciation amount. Since the depreciation is linear, you can divide the difference between the initial value and the scrap value by the number of years of useful life.
Step 1: Calculate the annual depreciation amount.
The initial value of the machine is $10,000, and the scrap value is $1,000. The useful life is 18 years. Therefore, the annual depreciation amount would be:
Annual depreciation amount = (Initial value - Scrap value) / Useful life
Annual depreciation amount = ($10,000 - $1,000) / 18
Annual depreciation amount = $9,000 / 18
Annual depreciation amount = $500
Step 2: Calculate the remaining value after 9 years.
After 9 years of depreciation, the remaining useful life would be 18 - 9 = 9 years.
The remaining value can be calculated as:
Remaining value = Initial value - (Annual depreciation amount x Remaining useful life)
Remaining value = $10,000 - ($500 x 9)
Remaining value = $10,000 - $4,500
Remaining value = $5,500
Therefore, the value of the machine after 9 years of depreciation would be $5,500.