Sows company established at January 2016 to produce foods and medicine for animals, the company purchased a heavy equipment for production which cost 1,200,000 with 10 years useful life and 100,000 salvage value, the company used doble declining method for depreciati and WA for inventory. In 31/12/2019 the company changes its inventc method to FIFO, and its depreciation method to straight line, the Following reported income before tax for the previous years Year income at WA 370,000 390,000 410,000 280,000 income FIFO dividend paid 395,000 420,000 380,000 320,000 2016 160,000 250,000 300,000 200,000 2017 2018 2019
Sows company established at January 2016 to produce foods and medicine for animals, the company purchased a heavy equipment for production which cost 1,200,000 with 10 years useful life and 100,000 salvage value, the company used doble declining method for depreciati and WA for inventory. In 31/12/2019 the company changes its inventc method to FIFO, and its depreciation method to straight line, the Following reported income before tax for the previous years Year income at WA 370,000 390,000 410,000 280,000 income FIFO dividend paid 395,000 420,000 380,000 320,000 2016 160,000 250,000 300,000 200,000 2017 2018 2019
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 32BE: Depreciation Methods On January 1, 2019, Loeffler Company acquired a machine at a cost of $200,000....
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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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