Answer:
Book value of the machine at the end of year 4 is $20400
Explanation:
The year one depreciation is computed using the below straight depreciation method:
depreciation=cost-residual value/useful life=($36,000-$6,000)/6=$5,000
after year one book value=$36,000-$5,000=$31,000
year two depreciation=($31,000+$11,000-$6,000)/5=$7200
year 4 book value=$42,000-($7200*3)=$20400
depreciation from year 2 onwards remain the same
The book value of the machine on December 31, Year 4 is  $20,400
Please see year one depreciation as computed using the below straight depreciation method:
= Cost - Scrap value / Life time
=($36,000 - $6,000) / 6
= $5,000
After year one, book value
= $36,000 - $5,000
= $31,000
Year 2 depreciation
= ($31,000 + $11,000 - $6,000) / 5
= $7,200
Year 4 book value
= $42,000 - ($7200 * 3)
= $20,400
Therefore, book value of the machine on December 31, year 4 is $20,400
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