On June 1, 20--, a depreciable asset was acquired for $5,400. The asset has an estimated useful
Question:
On June 1, 20--, a depreciable asset was acquired for $5,400. The asset has an estimated useful life of five years (60 months) and no salvage value. Using the straight-line depreciation method, calculate the book value as of December 31, 20--.
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Original cost 5400 Less A...View the full answer
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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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