A Machine Was Purchased for $37,000 and Depreciated for 5

question 73

Essay

A machine was purchased for $37,000 and depreciated for 5 years on a straight-line basis under the assumption it would have a 10-year life and a $1,000 residual value.At the beginning of the machine's sixth year,it was recognized that it had 3 years of remaining life left,instead of five,and that at the end of the 3 years its residual value would be $1,600.What should the annual depreciation be for the machine's remaining years?

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Definitions:

Price Ceiling

A legally established maximum price that can be charged for a good or service, typically set by government.

Shortage

A situation where the demand for a product or service exceeds the available supply at a particular price.

Equilibrium Price

The market price at which the quantity demanded of a good equals the quantity supplied.

Quantity Demanded

The complete quantity of a product or service that buyers are ready and able to buy at a certain price during a defined time frame.