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A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000 and a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:

The issue price of bonds is found by computing the future value of the bond’s cash payments, discounted at the market rate of interest.

An advantage of lease financing is the lack of an immediate large cash payment for the leased asset.

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Obligations not due within one year or the company’s operating cycle, whichever is longer, are reported as current liabilities.

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Periodic interest payments on bonds are determined by multiplying the par value of the bond by the contract rate.

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second year depreciation under the straight-line method.

A company cannot have a liability if the amount of the obligation is unknown.