Canada's Wonderland paid $60,000 for a concession stand. Depreciation was recorded by the straight-line method over 10
Question:
Canada's Wonderland paid $60,000 for a concession stand. Depreciation was recorded by the straight-line method over 10 years with zero residual value. Suppose that after using the concession stand for four years, Canada's Wonderland determines that the asset will remain useful for only three more years. How will this affect depreciation on the concession stand for year 5 by the straight-line method?
Step by Step Answer:
Depreciation Expense Concession Stand Accumulated Depreciation Con...View the full answer
Financial Accounting
ISBN: 978-0133472264
5th Canadian edition
Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin
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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