To calculate the book value of the machine at the end of year 2, we need to follow these steps:

Given Information:

1. Cost of the machine: $\$35,000$
2. Useful life: 5 years
3. Salvage value: $\$0$ (assumed, since it wasn't explicitly stated)
4. Depreciation method: Straight-line

Step 1: Calculate Annual Depreciation

The straight-line depreciation formula is:

$\text{Annual Depreciation} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}}$

$\text{Annual Depreciation} = \frac{35,000 - 0}{5} = 7,000$

Step 2: Determine the Book Value at the End of Year 2

The book value is the original cost minus the accumulated depreciation. After 2 years:

$\text{Accumulated Depreciation after Year 2} = \text{Annual Depreciation} \times 2 = 7,000 \times 2 = 14,000$

$\text{Book Value at the End of Year 2} = \text{Cost} - \text{Accumulated Depreciation}$

$\text{Book Value at the End of Year 2} = 35,000 - 14,000 = 21,000$

Final Answer:

The book value of the machine at the end of year 2 is:

$\boxed{\$21,000}$

---

Do you want a breakdown of any specific part of this calculation, or have further questions?

Related Questions:

1. How does the salvage value affect depreciation calculations?
2. What if the machine had a salvage value of $5,000—what would the book value be?
3. How does the double-declining balance method differ from straight-line in this case?
4. If the machine is sold after year 2 for $22,000, how is the gain or loss calculated?
5. Can straight-line depreciation be used for tax purposes in all jurisdictions?

Tip: Always check whether a salvage value is provided before starting depreciation calculations—it directly affects the annual depreciation amount.