Instructions For each of the following plant assets: 1. calculate the amount to be depreciated, 2. calculate
Question:
Instructions
For each of the following plant assets:
1. calculate the amount to be depreciated,
2. calculate the annual depreciation expense using the straight-line method,
3. calculate the depreciation expense for the first year.
Use the form provided in your working papers.
Plant Asset 1. Cash register 2. Computer 3. Conference table 4. Delivery truck 5. Desk Months Owned First Year 8 2631 Original Cost $ 450 6,500 1,900 36,400 3,180 Estimated Disposal Value $ 30 1,500 100 6,400 300 Estimated Useful Life 7 years 5 years 25 years 5 years 20 years
Step by Step Answer:
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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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