Purchased a piece of equipment that cost $250,000 on January 1, 2011. The equipment will last 8 years and have a residual value of $10,000. Compute the following using the straight-line method of depreciation.
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.
The following are long-term asset transactions of Company Q.
Purchased a piece of equipment that cost $250,000 on January 1, 2011. The equipment will last 8 years and have a residual value of $10,000.
Compute the following using the straight-line method of
Accumulated Depreciation in 2013- Depreciation Expense in 2014
- Net Book Value in 2016
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
