An asset was purchased for $118,000 on January 1, Year 1, and originally estimated to have a useful life of 11 years with a residual value of $11,500. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,200. Compute the third-year depreciation expense using the revised amounts and straight-line method. a.$23,109.09 b.$24,109.09 c.$25,109.09 d.$24,609.09
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.
An asset was purchased for $118,000 on January 1, Year 1, and originally estimated to have a useful life of 11 years with a residual value of $11,500. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,200. Compute the third-year
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