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The book value of the new machine on December 31 would be -$8,000.
The book value of the new machine on December 31 would be calculated as follows:
Purchase Price: $30,000
Setup Charge: $2,000
Depreciation (Monthly): $500
Depreciation (Yearly): $6,000
Book Value = Purchase Price - (Setup Charge + Accumulated Depreciation)
Book Value = $30,000 - ($2,000 + (12 x $500) + (5 x $6,000))
Book Value = $30,000 - ($2,000 + $6,000 + $30,000)
Book Value = $30,000 - $38,000
Book Value = -$8,000
Therefore, the book value of the new machine on December 31 would be -$8,000.
The term depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Depreciation represents how much of an asset's value has been used. It allows companies to earn revenue from the assets they own by paying for them over a certain period of time.
To know more about depreciation here
https://brainly.com/question/26521891
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