included in its trial balance immediately prior ON TIME CORPORATION Adjusted Trial Balance At May 31, 2016 (millions of dollars) Debit Credit $4 $ 3,600 Accounts Payable Accounts Receivable Accumulated Depreciation 24 $ 5,700 20,300 5,600 Cash 3,400 Common Stock Depreciation Expense Dividends 3,100 240 39,500 4,500 1, 250 Equipment Goodwill Income Tax Expense Income Tax Payable Interest Expense Interest Receivable 1,250 170 80 Interest Revenue 90 8,400 Notes Payable (long-term) Notes Payable (short-term) Office Expenses Prepaid Rent Rent Expense Repairs and Maintenance Expense Retained Earnings Salaries and Wages Expense Salaries and Wages Payable Service Revenue Supplies Transportation Expense 650 7,610 1, 200 3,200 2,600 16,680 17,300 2,400 48,400 520 12,600 $105,170 $105,170
included in its trial balance immediately prior ON TIME CORPORATION Adjusted Trial Balance At May 31, 2016 (millions of dollars) Debit Credit $4 $ 3,600 Accounts Payable Accounts Receivable Accumulated Depreciation 24 $ 5,700 20,300 5,600 Cash 3,400 Common Stock Depreciation Expense Dividends 3,100 240 39,500 4,500 1, 250 Equipment Goodwill Income Tax Expense Income Tax Payable Interest Expense Interest Receivable 1,250 170 80 Interest Revenue 90 8,400 Notes Payable (long-term) Notes Payable (short-term) Office Expenses Prepaid Rent Rent Expense Repairs and Maintenance Expense Retained Earnings Salaries and Wages Expense Salaries and Wages Payable Service Revenue Supplies Transportation Expense 650 7,610 1, 200 3,200 2,600 16,680 17,300 2,400 48,400 520 12,600 $105,170 $105,170
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 31P
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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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