Tedesco Company changed depreciation methods in 2025 from double-decliningbalance to straight-line. Depreciation prior to 2025 under double-declining-balance
Question:
Tedesco Company changed depreciation methods in 2025 from double-decliningbalance to straight-line. Depreciation prior to 2025 under double-declining-balance was $90,000, whereas straight-line depreciation prior to 2025 would have been $50,000. Tedesco’s depreciable assets had a cost of $250,000 with a $40,000 salvage value, and an 8-year remaining useful life at the beginning of 2025. Prepare the 2025 journal entries, if any, related to Tedesco’s depreciable assets.
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Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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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