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Show how the company profit be affected

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Question - A company is exploring the impact of the two method of depreciation. On 1 January, it bought a machinery for $15,000. The methods are (i) straight line where useful life 14 is 4 years and residual value is $2,000 and (ii) Reducing balance method -at the rate of 20% per annum. Show how the company's profit be affected if the straight line method is used rather than the reducing method?

a. Profit increased by $250.

b. Profit increased by $300.

c. Profit decreased by $500.

d. Profit decreased by $1,100.

Reference no: EM132594830

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