Fixed assets: Fixed assets are long lived economic resources which are owned by the company. Fixed asset accounts are increased by the debits and decreased by the credits. Thus, fixed asset accounts normally show debit balances (balance sheet). Depreciation expenses: Depreciation is permanent decreases in the monetary value of an asset over the time period due to use, wear and tear or obsolescence. It is the process of allocating (allocation concept) the cost of an asset to expense over its useful life. Depreciation expense is the amount of depreciation that is reported (expenses) on the income statement. Accumulated depreciation : Accumulated depreciation refers to the amount of depreciation that is subtracted from the value of assets in the balance sheet over a period of time. To determine: The book value of fixed asset.

Question

Account MNO Corporation had the following information regarding its fixed assets: Beginning of the year: $500,000Additions during the year: $100,000Disposals during the year: $50,000Accumulated depreciation at the beginning of the year: $200,000Depreciation expense for the year: $50,000Calculate the net book value of fixed assets at the end of the year.

Answer 1

Question

Chapter 3, Problem 3.20EX

(a)

To determine

Fixed assets: Fixed assets are long lived economic resources which are owned by the company. Fixed asset accounts are increased by the debits and decreased by the credits. Thus, fixed asset accounts normally show debit balances (balance sheet).

Depreciation expenses: Depreciation is permanent decreases in the monetary value of an asset over the time period due to use, wear and tear or obsolescence. It is the process of allocating (allocation concept) the cost of an asset to expense over its useful life. Depreciation expense is the amount of depreciation that is reported (expenses) on the income statement.

Accumulated depreciation: Accumulated depreciation refers to the amount of depreciation that is subtracted from the value of assets in the balance sheet over a period of time.

To determine: The book value of fixed asset.

(b)

To determine

To indicate: Whether the book value of M Corporation’s fixed assets normally approximate their market value.

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Account MNO Corporation had the following information regarding its fixed assets: Beginning of the year: $500,000Additions during the year: $100,000Disposals during the year: $50,000Accumulated depreciation at the beginning of the year: $200,000Depreciation expense for the year: $50,000Calculate the net book value of fixed assets at the end of the year.

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