On January 2, 2018, the Matthews Band acquires sound equipment for concert performances at a cost of
Question:
On January 2, 2018, the Matthews Band acquires sound equipment for concert performances at a cost of $65,800. The band estimates it will use this equipment for four years, during which time it anticipates performing about 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During year 2018, the band performs 45 concerts.
Compute the year 2018 depreciation using the straight-line method.
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Financial Accounting Information for Decisions
ISBN: 978-1259917042
9th edition
Authors: John J. Wild
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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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