Cheesesteak's Sandwich Shop had the following long-term asset balances as of January 1, 2024: Cost Accumulated Depreciation Book Value Land $70,000 0 $70,000 Building 545,000 $(103,550) 441,450 Equipment 145,000 (27,000) 118,000 Patent 87,500 (35,000) 52,500 Additional information: Cheesesteak's purchased all the assets at the beginning of 2022. The building is depreciated over a 20-year service life using the double-declining-balance method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the straight-line method with an estimated residual value of $10,000. The patent is estimated to have a five-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization have been recorded for 2022 and 2023 (first two years). 1. For the year ended December 31, 2024 (third year), record depreciation expense for buildings and equipment. Land is not depreciated. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
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.
Cheesesteak's Sandwich Shop had the following long-term asset balances as of January 1, 2024: Cost
1. For the year ended December 31, 2024 (third year), record depreciation expense for buildings and equipment. Land is not depreciated. (If no entry is required for a transaction/event, select "No
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