Birkey Company purchased equipment on January 1, 2020, at a total cost of $99,000. The machinery’s estimated useful life is 8 years or 60,000 hours, and its residual value is $9,000. During 2020 and 2021, the machinery was used 7,000 and 8,00 hours, respectively. This information will be used for Parts 1, 2, and 3 of this problem. It will be repeated in each part. What is the book value on Dec. 31, 2021 after the second year's adjusting entry (straight-line)? Show your calculations Blank 1. Fill in the blank, read surrounding text. Book Value, Dec 31, 2021 Straight-Line Method Blank 2. Fill in the blank, read surrounding text.
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.
Birkey Company purchased equipment on January 1, 2020, at a total cost of $99,000. The machinery’s estimated useful life is 8 years or 60,000 hours, and its residual value is $9,000. During 2020 and 2021, the machinery was used 7,000 and 8,00 hours, respectively.
This information will be used for Parts 1, 2, and 3 of this problem. It will be repeated in each part.
What is the book value on Dec. 31, 2021 after the second year's
| Show your calculations |
Blank 1. Fill in the blank, read surrounding text. |
|
Book Value, Dec 31, 2021 Straight-Line Method |
Blank 2. Fill in the blank, read surrounding text. |
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