The company acquired a machine on January 1 at an original cost of $100,000. The machines estimated
Question:
The company acquired a machine on January 1 at an original cost of $100,000. The machine’s estimated residual value is $10,000, and its estimated life is four years. The company uses double-declining-balance depreciation and switches to straight-line in the final year of the machine’s life. Compute
(1) Depreciation expense for each year of the machine’s 4-year life and
(2) Book value at the end of each year of the machine’s 4-year life.
Step by Step Answer:
1 and 2 Doubledecliningbalance percentage 1004 years 2 50 Deprec...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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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