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On January 1, 2005, the company purchased equipment for $100,000. The equipment has a 10-year expected useful

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On January 1, 2005, the company purchased equipment for $100,000. The equipment has a 10-year expected useful life and $0 residual value. Initially, the company used straight-line depreciation. On January 1, 2008, the company changed to double-declining-balance depreciation. Compute depreciation expense for 2008. Ignore income taxes.

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Straightline depreciation 100000 010 years 10000 per year Depre...View the full answer


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Intermediate Accounting

Intermediate Accounting

ISBN: 978-0324312140

16th Edition

Authors: James D. Stice, Earl K. Stice, Fred Skousen

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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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