Peter's Records purchases a new Record-Pressing Machine for $77,000, on the 1st January 2020 The machine is expected to have a useful life of 5 years, and a residual value of $1,000. The machine is capable of printing 200,000 vinyl records during its lifetime. Peter applies the Units-of-Production depreciation method to all his machinery The quantity of vinyl records Peter will make in the future is fixed at: 1st Year 53,000 units 2nd Year 34,500 units 3rd Year 32,900 units 4th Year 47,200 units 5th year 32,400 units The correct journal entry to record the depreciation for the 3rd Year would be: Select one: O a. Debit Depreciation Expense $12,502 Credit Accumulated Depreciation $12,502
Peter's Records purchases a new Record-Pressing Machine for $77,000, on the 1st January 2020 The machine is expected to have a useful life of 5 years, and a residual value of $1,000. The machine is capable of printing 200,000 vinyl records during its lifetime. Peter applies the Units-of-Production depreciation method to all his machinery The quantity of vinyl records Peter will make in the future is fixed at: 1st Year 53,000 units 2nd Year 34,500 units 3rd Year 32,900 units 4th Year 47,200 units 5th year 32,400 units The correct journal entry to record the depreciation for the 3rd Year would be: Select one: O a. Debit Depreciation Expense $12,502 Credit Accumulated Depreciation $12,502
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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