A warehouse with a cost of $800,000 has an estimated residual value of $200,000, an estimated useful
Question:
(a) What is the amount of the annual depreciation?
(b) What is the book value at the end of the twentieth year of use?
(c) If at the start of the twenty-first year it is estimated that the remaining life is 25 years and that the residual value is $150,000, what is the depreciation expense for each of the remaining 25 years?
Step by Step Answer:
a 15000 800000 2000...View the full answer
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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