Straight Line depreciation of Furniture & Equipment for the month is calculated using the annual depreciation % rate. The fixed asset has a $35 000 salvage value at the end of its life. Hint: work out the
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.
Question 1
Straight Line
Furniture and equipment at cost $274,000
Furniture and equipment
Total furniture and equipment $ 250,000
Question 2
Amortisation of leasehold improvements is based on the term of the lease which is 15 years. An
Improvements at cost $110,000
Improvement amortisation -$4,888
Total Leasehold improvements $105,112
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