On January 4, 20X1, Wilson Company purchased new equipment for $310,000 that had a useful life of
Question:
On January 4, 20X1, Wilson Company purchased new equipment for $310,000 that had a useful life of four years and a salvage value of $40,000.
INSTRUCTIONS
Prepare a schedule showing the annual depreciation and end-of-year accumulated depreciation for the first three years of the asset’s life under (1) the straight-line method, (2) the sum-of-the-years’- digits method, and (3) the double-declining-balance method.
Analyze: If the sum-of-the-years’-digits method is used to compute depreciation, what would be the book value of the asset at the end of 20X2?
Step by Step Answer:
Analyze The book value at the end of 20X2 under the Sumoftheyears digit is121...View the full answer
College Accounting Chapters 1-30
ISBN: 9781260247909
16th Edition
Authors: David Haddock, John Price, Michael Farina
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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