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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 10, Problem 9E
Textbook Problem
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A Kubota tractor acquired on January 8 at a cost of $85,000 has an estimated useful life of 10 years. Assuming that it will have no residual value, determine the depreciation for each of the first two years (a) by the straight-line method and (b) by the double-declining-balance method.

(a)

To determine

Determine the amount of depreciation for each of the first two years by the straight-line method.

Explanation of Solution

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the residual value is shown as below:

Depreciation = (Cost of the assetResidual value)Estimated useful life of the asset

Determine the amount of depreciation for the first year.

Cost of the refrigerator= $85,000

Estimated Useful Life =10 years

Depreciation = (

(b)

To determine

Determine the amount of depreciation for each of the first two years by the double-declining-balance method.

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Chapter 10 Solutions

Financial Accounting
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