Problem 13-41 Increasing Residual Income over Time (LO 13-2, 13-4, 13-5) Suncoast Food Centers has provided the following Information with regard to the purchase of equipment. Acquisition cost of equipment Useful life $620,000 Salvage value at end of useful life Annual straight-line depreciation Annual income generated by asset (before deducting depreciation) Year Use a 10 percent rate to compute the imputed Interest charge. Required: Complete the following table. 1 2 3 4 5 Income Before Depreciation Annual Depreciation 5 years $124,000 $186,000 Income Net of Depreciation Based on Net Book Value Imputed interest Residual Income Average Orocs Charge Book Value Average Net Book Value Based on Gross Book Value Imputed Interest Charge Recidual Income
Problem 13-41 Increasing Residual Income over Time (LO 13-2, 13-4, 13-5) Suncoast Food Centers has provided the following Information with regard to the purchase of equipment. Acquisition cost of equipment Useful life $620,000 Salvage value at end of useful life Annual straight-line depreciation Annual income generated by asset (before deducting depreciation) Year Use a 10 percent rate to compute the imputed Interest charge. Required: Complete the following table. 1 2 3 4 5 Income Before Depreciation Annual Depreciation 5 years $124,000 $186,000 Income Net of Depreciation Based on Net Book Value Imputed interest Residual Income Average Orocs Charge Book Value Average Net Book Value Based on Gross Book Value Imputed Interest Charge Recidual Income
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter5A: Depreciation Methods
Section: Chapter Questions
Problem 4SEB: MODIFIED ACCELERATED COST RECOVERY SYSTEM Using the information given in Exercise 5Apx-1B and 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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