Equipment with a cost of $300,000 has an estimated residual value of $42,000, has an estimated useful
Question:
(a) Determine the amount of the annual depreciation.
(b) Determine the book value at the end of the fourteenth year of use.
(c) Assuming that at the start of the fifteenth year the remaining life is estimated to be five years and the residual value is estimated to be $20,000, determine the depreciation expense for each of the remaining five years.
Step by Step Answer:
a 10750 300000 ...View the full answer
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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