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Question - The entity paid $100,000 for paving the land. It was ready for its intended use on May 31, 2000. It could last 10 years, but the entity expects to redo it in 5 years. As some materials could be recycled, it is believed that its residual value will be $5,000 in 5 years and $1,000 in 10 years. The entity wants to amortize it using the declining-balance method and a 20% rate.
The financial year ends on December 31.
Required -
1. Record the acquisition of the pavement.
2. Calculate the amortization expense of the entity.
3. Record the amortization expense of the entity.
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