At the beginning of 2009, Robotics Inc. acquired a manufacturing facility for $12 million. $9 million of
Question:
At the beginning of 2009, Robotics Inc. acquired a manufacturing facility for $12 million. $9 million of the purchase price was allocated to the building. Depreciation for 2009 and 2010 was calculated using the straight-line method, a 25-year useful life, and a $1 million residual value. In 2011, the estimates of useful life and residual value were changed to 20 years and $500,000, respectively. What is depreciation on the building for 2011?
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Calculation of annual depreciation after the estimate change 9000000 Cos...View the full answer
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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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