On May 1, 2015, Casico Toy Inc. purchased a new piece of equipment that cost $52,000. The estimated useful life is five years and the estimated residual value is $4,000. During the five years of useful life the equipment is expected to produce 20,000 units. If the company uses the double declining balance method of depreciation, what is the depreciation expense for the year ended December 31st, 2018?
On May 1, 2015, Casico Toy Inc. purchased a new piece of equipment that cost $52,000. The estimated useful life is five years and the estimated residual value is $4,000. During the five years of useful life the equipment is expected to produce 20,000 units. If the company uses the double declining balance method of depreciation, what is the depreciation expense for the year ended December 31st, 2018?
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 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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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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