The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc.Net book value – old print machine $20,000Total cost of new machine $180,000Down payment on new machine $35,000Sale price of old machine $30,000Tax rate 30%What is the net total of relevant costs on January 2, year 2?a. $173,000b. $153,000c. $28,000d. 8,000.
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.
The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc.
Net book value – old print machine $20,000
Total cost of new machine $180,000
Down payment on new machine $35,000
Sale price of old machine $30,000
Tax rate 30%
What is the net total of relevant costs on January 2, year 2?
a. $173,000
b. $153,000
c. $28,000
d. 8,000.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
