On January 1, 2021 the Hogan Manufacturing Company purchased a machine for $250,000. The company expects the service life of the machine to be 5 years and its anticipated residual value to be $40,000. The company's financial year end is December 31 and the straight line method is used for all depreciable assets. Jan 1, 2023, the company revised its estimate of service life from 5 to 8 years and also revised its estimated residual value to be $22,000. Required: Calculate depreciation for 2023
On January 1, 2021 the Hogan Manufacturing Company purchased a machine for $250,000. The company expects the service life of the machine to be 5 years and its anticipated residual value to be $40,000. The company's financial year end is December 31 and the straight line method is used for all depreciable assets. Jan 1, 2023, the company revised its estimate of service life from 5 to 8 years and also revised its estimated residual value to be $22,000. Required: Calculate depreciation for 2023
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 10E: Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual...
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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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