. Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2020. a. The service life of certain equipment was changed from 8 to 5 years. If a 5-year life had been used previously, additional depreciation of $425,000 would have been charged. b. In 2020, a flood destroyed a warehouse that had a book value of $1,600,000. Floods are rare in this locality. c. In 2020, the company wrote off $1,000,000 of inventory that was considered obsolete. d. In 2017, a supply warehouse with an expected useful life of 7 years was erroneously expensed. e. Boleyn, Inc. changed from weighted-average to FIFO inventory pricing.
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.
. Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2020. a. The service life of certain equipment was changed from 8 to 5 years. If a 5-year life had been used previously, additional
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