A storage tank acquired at the beginning of the fiscal year at a cost of $586,000 has an estimated residual value of $52,000 and an estimated useful life of 10 years. Determine the following: a. the amount of annual depreciation by the straight-line method and b. the amount of depreciation for the first, second, and third years computed by the double-declining-balance method. C. A diesel-powered tractor with a cost of $216,000 and estimated residual value of $39,000 is expected to have a useful operating life of 45,000 hours. During February, the generator was operated 860 hours. Determine the depreciation for the month. d. Prepare the journal entry to record the depreciation under c. above.
A storage tank acquired at the beginning of the fiscal year at a cost of $586,000 has an estimated residual value of $52,000 and an estimated useful life of 10 years. Determine the following: a. the amount of annual depreciation by the straight-line method and b. the amount of depreciation for the first, second, and third years computed by the double-declining-balance method. C. A diesel-powered tractor with a cost of $216,000 and estimated residual value of $39,000 is expected to have a useful operating life of 45,000 hours. During February, the generator was operated 860 hours. Determine the depreciation for the month. d. Prepare the journal entry to record the depreciation under c. above.
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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