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Farm Balance Sheet Analysis

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					             Think Break #12

   You buy a piece of equipment for $7000
    with a useful life of 3 years and expected
    salvage value of $1000
   What is the Straight Line depreciation for
    the second year?
     Think Break #12 Answer
Straight Line Depreciation for year 2
  = (Cost – Salvage Value)/Useful Life
  = ($7,000 – $1,000)/3 = $2,000
 Think Break #12: Straight Line
Year Beginning Basis Depreciation Ending Basis
 1        7,000         2,000        5,000
 2        5,000         2,000        3,000
 3        3,000         2,000        1,000

				
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