Taylor Company purchased a machine for $9,800 on January 1, 2016. The machine has beendepreciated using the straight-line method assuming it has a five-year life with a $1,400residual value. Taylor sold the machine on January 1, 2018, for $7,600.Q7-61. What is the book value of the machine on December 31, 2017?a. $2,100b. $6,440c. $8,400d. $9,800
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.
Taylor Company purchased a machine for $9,800 on January 1, 2016. The machine has been
depreciated using the straight-line method assuming it has a five-year life with a $1,400
residual value. Taylor sold the machine on January 1, 2018, for $7,600.
Q7-61. What is the book value of the machine on December 31, 2017?
a. $2,100
b. $6,440
c. $8,400
d. $9,800
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