Double $ 360,500 $ 120,155 $ 240,345 C. 1. х 33.33% declining 2. 240,345 33.33% 80,107 53,407 х 160,238 balance 3 160,238 х 33.33% 106,831 106,831 71,224 4 х 33.33% 35,607 71,224 33.33% 23,739 47,485 47,485 If the crane was sold for $250,000 after year 3, the gain or loss under each method follows: A gain of $ 52,250 b. A gain of $ 94,565 A gain of ( $ 250,000 ($ 250,000 ( $ 250,000 $ 197,750 $ 155,435 a. c. רח
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.
Italian Construction Company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1,500 hours in year 4; 1,200 hours in year 5; and 1,000 hours in year 6.
REQUIRED
1. Compute the annual
2. If the crane is sold for $250,000 after year 3, what would be the amount of gain or loss under each method?
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