Ivanhoe Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Excavation costs for new building Architect's fees on building plans Expenditures Full payment to building contractor Cost of real estate purchased as a plant site (land $285,200 and building $32,700) Cost of parking lots and driveways Accrued real estate taxes paid at time of purchase of real estate Installation cost of fences around property Cost of demolishing building to make land suitable for construction of new building Real estate taxes paid for the current year on land Receipts Proceeds from salvage of demolished building $13,545 41,540 667,100 317,900 37,530 3,710 6,240 31,700 6,790 $1,126,055 $ 12,800

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 exp…

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…