On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, which of the following shows how the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the Company's financial statements? Balance sheet Cash +Truck- NA - NA + NA - NA + NA NA A. NA B. C. D. .. + Assets Multiple Choice 22 NA Option A Option B Option C Acc. Dep. =Liab. + 30,000 M NA * 30,000 M NA • 10,000 NA + 10,000 . NA Equity Rev. 30,000 NA 10,000 NA 10,000 NA (10,000) NA Income Statement Exp. = -30,000- 10,000 -10,000 - -10,000 Net Inc. (30,000) (10,000) (10,000) (10,000) Cash Flow Statement NA NA (10,000) 04 NA
On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, which of the following shows how the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the Company's financial statements? Balance sheet Cash +Truck- NA - NA + NA - NA + NA NA A. NA B. C. D. .. + Assets Multiple Choice 22 NA Option A Option B Option C Acc. Dep. =Liab. + 30,000 M NA * 30,000 M NA • 10,000 NA + 10,000 . NA Equity Rev. 30,000 NA 10,000 NA 10,000 NA (10,000) NA Income Statement Exp. = -30,000- 10,000 -10,000 - -10,000 Net Inc. (30,000) (10,000) (10,000) (10,000) Cash Flow Statement NA NA (10,000) 04 NA
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 4CE: Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the...
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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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