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On January 1, 2011, Munoz Co. purchased machinery. The machinery has an estimated useful life of...

On January 1, 2011, Munoz Co. purchased machinery. The machinery has an estimated useful life of eight years and an estimated salvage value of $2,703. The depreciation applicable to this machinery was $31,845 for 2013, computed by the sum-of-the-years'-digits method. The acquisition cost of the machinery was

(rounding hint: if you convert a fraction to a decimal, don't round it when going forward to use it in any calculations. For example, if 32/55 = .581818181818181...leave all those decimals in your calculator when going on to do any further calculations.) Answer: 193,773

How do I get to this answer I keep getting 191,070?

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Answer #1

Answer is given below

Since scrap value of asset was excluded initially while calculating the depreciation it should be added back to get the cost of Asset

Total digits for 8 years Depreciation for 6th year $31,845 $191,070 Net cost of the Asset ($ 31,845 X 36)/6 Add: Scrap value

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