A machine that cost $ 20,000 has been depreciated on a straight line basis assuming a service life of 10 years and no residual value. During the fourth year, it was decided that the total service life would be no more than 6 years, rather than 10. The depreciation expense for the fourth year should be a. $ 2,000 b. $ 3,333 c. $ 4,667 d. $ 5,000
A machine that cost $ 20,000 has been depreciated on a straight line basis assuming a service life of 10 years and no residual value. During the fourth year, it was decided that the total service life would be no more than 6 years, rather than 10. The depreciation expense for the fourth year should be a. $ 2,000 b. $ 3,333 c. $ 4,667 d. $ 5,000
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 3CE: A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years....
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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A machine that cost $ 20,000 has been depreciated on a straight line basis assuming a service life of 10 years and no residual value. During the fourth year, it was decided that the total service life would be no more than 6 years, rather than 10. The depreciation expense for the fourth year should be
a. $ 2,000
b. $ 3,333
c. $ 4,667
d. $ 5,000
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