Mason Industries purchased a drilling rig for $75,900. Delivery costs totaled $2,824. The useful life is 7 years and the salvage value is $12,959. Prepare a depreciation schedule using the straight-line method. Mason IndustriesDepreciation Schedule—Drilling End of Year Annual Depreciation ($) Accumulated Depreciation ($) Book Value ($) $78,724 (new) 1 2 3 4 5 6 7 Step 1 Straight-line depreciation provides for equal periodic charges to be written off over the estimated useful life of an asset. A depreciation schedule is a chart illustrating the depreciation activity of the asset for each year of its useful life. The chart shows the total cost of the asset, the number of useful life years, the amount of depreciation each year, the accumulated depreciation to date, the book value at the end of each year, and the salvage value of the asset. The first values to find are the total cost and total depreciation. The total cost is the purchase price of the asset and any other fees, such as delivery. The price of the drilling rig is $75,900 and there are delivery costs of $2,824. Find the total cost (in $) of the drilling rig when it was new. total cost = purchase price + other fees = 75,900 + 2,824 = $ The total depreciation is the decrease in value from the total cost of an asset over its useful life. It is calculated as the difference of the total cost and the salvage value. The drilling rig has a salvage value of $12,959. Use the calculated total cost and the salvage value to find the total amount of depreciation (in $). total depreciation = total cost − salvage value
Mason Industries purchased a drilling rig for $75,900. Delivery costs totaled $2,824. The useful life is 7 years and the salvage value is $12,959. Prepare a depreciation schedule using the straight-line method. Mason IndustriesDepreciation Schedule—Drilling End of Year Annual Depreciation ($) Accumulated Depreciation ($) Book Value ($) $78,724 (new) 1 2 3 4 5 6 7 Step 1 Straight-line depreciation provides for equal periodic charges to be written off over the estimated useful life of an asset. A depreciation schedule is a chart illustrating the depreciation activity of the asset for each year of its useful life. The chart shows the total cost of the asset, the number of useful life years, the amount of depreciation each year, the accumulated depreciation to date, the book value at the end of each year, and the salvage value of the asset. The first values to find are the total cost and total depreciation. The total cost is the purchase price of the asset and any other fees, such as delivery. The price of the drilling rig is $75,900 and there are delivery costs of $2,824. Find the total cost (in $) of the drilling rig when it was new. total cost = purchase price + other fees = 75,900 + 2,824 = $ The total depreciation is the decrease in value from the total cost of an asset over its useful life. It is calculated as the difference of the total cost and the salvage value. The drilling rig has a salvage value of $12,959. Use the calculated total cost and the salvage value to find the total amount of depreciation (in $). total depreciation = total cost − salvage value
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 11PA: Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and...
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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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Mason Industries purchased a drilling rig for $75,900. Delivery costs totaled $2,824.
The useful life is 7 years and the salvage value is $12,959. Prepare a depreciation schedule using the straight-line method.
Mason IndustriesDepreciation Schedule—Drilling
End of Year | Annual Depreciation ($) | Book Value ($) | |
---|---|---|---|
$78,724 (new) | |||
1 | |||
2 | |||
3 | |||
4 | |||
5 | |||
6 | |||
7 |
Step 1
Straight-line depreciation provides for equal periodic charges to be written off over the estimated useful life of an asset. A depreciation schedule is a chart illustrating the depreciation activity of the asset for each year of its useful life. The chart shows the total cost of the asset, the number of useful life years, the amount of depreciation each year, the accumulated depreciation to date, the book value at the end of each year, and the salvage value of the asset.
The first values to find are the total cost and total depreciation. The total cost is the purchase price of the asset and any other fees, such as delivery. The price of the drilling rig is $75,900 and there are delivery costs of $2,824. Find the total cost (in $) of the drilling rig when it was new.
total cost | = | purchase price + other fees |
= | 75,900 + 2,824 | |
= | $ |
The total depreciation is the decrease in value from the total cost of an asset over its useful life. It is calculated as the difference of the total cost and the salvage value. The drilling rig has a salvage value of $12,959. Use the calculated total cost and the salvage value to find the total amount of depreciation (in $).
total depreciation | = | total cost − salvage value |
= | $ |
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