May 1st 2016 for 745,000 with 5 years useful life and nil residual value. In 2017, the first machine was sold for 50,000 on June 30th when a new machine was purchased for 30,000 with 3 years useful life and 3,000 as residual v
May 1st 2016 for 745,000 with 5 years useful life and nil residual value. In 2017, the first machine was sold for 50,000 on June 30th when a new machine was purchased for 30,000 with 3 years useful life and 3,000 as residual v
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 7EB: Kenzie purchased a new 3-D printer for $450,000. Although this printer is expected to last for ten...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Kavita purchased a machine for 780,000 on 1st April 2015. She charges depreciation on Straight Line Method and closes her books on December 31st every year. The machine has a useful life of 8 years after which it can be sold for 18,000. She purchased another machine on May 1st 2016 for 745,000 with 5 years useful life and nil residual value. In 2017, the first machine was sold for 50,000 on June 30th when a new machine was purchased for 30,000 with 3 years useful life and 3,000 as residual value. Prepare the machinery account for the 3 years ending December 31, 2017.
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