Sarto Co. purchased a $350,000 asset on 1 January 20X2. In 20X6, the company changed the total
Question:
Sarto Co. purchased a $350,000 asset on 1 January 20X2. In 20X6, the company changed the total useful life from 20 years to 14 years. The asset was originally expected to be sold for $50,000 at the end of its useful life, but that amount was also changed in 20X6 to $20,000. Sarto applies the straight-line method of depreciation to this asset, and had claimed a full year of depreciation in the year of acquisition.
Required:
Calculate 20X6 depreciation expense.
Step by Step Answer:
Carrying value of the asset on 1 Ja...View the full answer
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
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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