Hugo Ltd has acquired a machine for $26,000 and it cost a further $2,000 to install and set up the machine for operation. It is expected to operate within normal parameters for 6 years. It will be technologically obsolete in 10 years. The expected salvage values are $1,500 after 10 years and $2,000 after 6 years. The benefits to be derived from the machine are expected to be greater in the early years of its life. What depreciation should be charged in each of the first 2 years of the equipment's life using sum-of-digits depreciation?

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The Answer of Hugo Ltd has acquired a machine for $26,000 and it cost a further $2,000 to install and set up the machine for operation. It is expected to operate within normal parameters for 6 years. It will be technologically obsolete in 10 years. The expected salvage values are $1,500 after 10 years and $2,000 after 6 years. The benefits to be derived from the machine are expected to be greater in the early years of its life. What depreciation should be charged in each of the first 2 years of the equipment's life using sum-of-digits depreciation?

Hugo Ltd Has Acquired a Machine for $26,000 and It