On January 1, 2015, Zade Manufacturing Company Purchased a Machine

question 132

Essay

On January 1, 2015, Zade Manufacturing Company purchased a machine for $40,000,000. The company expects to use the machine for 24,000 hours over the next 6 years. The estimated sale value of the machine at the end of the sixth year is $40,000. The company used the machine for 3,600 hours in 2015 and 5,000 hours in 2016.
What is the book value of the machine at the end of year 2016 if the company uses double-declining-balance method of depreciation? (Do not round your intermediate calculations.)

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Definitions:

Capital Lease

A lease classified as a purchase by the lessee, obligating them to record the leased asset as an owned asset in their financial statements.

Partially Amortized

A loan repayment plan where the total sum borrowed is not fully paid off by the end of the loan term, leaving a lump sum due as a "balloon payment."

Net Advantage

The quantitative benefit or gain derived from a particular decision or action, after considering all related costs and disadvantages.

Leasing

A financial arrangement where one party allows another to use an asset for a period of time in exchange for payment.