1. Compute the amount of depreciation expense for the year ended December 31,20X1, using the straight-line method of depreciation. 2. If 16,000 units are produced in 20X1 and 24,000 units are produced in 20X2, what is the book value of the equipment at December 31, 20X2? The company uses the units-of-activity depreciation method. 3. If the company uses double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation -Equipment account at December 31, 20X3.
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.
Placer Company purchased equipment on January 1, 20X1, for $80,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life.
1. Compute the amount of
2. If 16,000 units are produced in 20X1 and 24,000 units are produced in 20X2, what is the book value of the equipment at December 31, 20X2? The company uses the units-of-activity depreciation method.
3. If the company uses double-declining-balance method of depreciation, what is the balance of the
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 5 images
