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What changes in estimates affect calculation of depreciation expense using the straight-line method? Explain the appropriate accounting

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What changes in estimates affect calculation of depreciation expense using the straight-line method? Explain the appropriate accounting treatment when there is a revision of an estimate that affects the calculation of depreciation expense.
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Either changes in estimated residual value or usef...View the full answer


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Accounting Introduction To Financial Accounting

Accounting Introduction To Financial Accounting

ISBN: 9781517089719

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Authors: Henry Dauderis, David Annand

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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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