5 purchase price was allocated to the building. Depreciation for the first two years was calculated using 6 the straight- line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year 73, the company switched to the double - declining - balance depreciation method. 8 9 Compute the amount of depreciation recorded in each of the three years. \table [10,,],[11, Purchase price,$15,000,000 C 5 At the beginning of Year 1, Fields Realty acquired an omice building for $10,000,000 VILIC purchase price was allocated to the building. Depreciation for the first two years was calculated using 6 the straight-line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year 7 8 3, the company switched to the double-declining-balance depreciation method. 9 Compute the amount of depreciation recorded in each of the three years. Purchase price Allocated to the building 10 11 12 13 Residual value 14 15 16 17 Useful life (years) Year Depreciation Expense $400,000.00 18 2 $400,000.00 19 3 $1,022,222.22 20 21 $15,000,000 $10,000,000 $2,000,000 20
5 purchase price was allocated to the building. Depreciation for the first two years was calculated using 6 the straight- line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year 73, the company switched to the double - declining - balance depreciation method. 8 9 Compute the amount of depreciation recorded in each of the three years. \table [10,,],[11, Purchase price,$15,000,000 C 5 At the beginning of Year 1, Fields Realty acquired an omice building for $10,000,000 VILIC purchase price was allocated to the building. Depreciation for the first two years was calculated using 6 the straight-line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year 7 8 3, the company switched to the double-declining-balance depreciation method. 9 Compute the amount of depreciation recorded in each of the three years. Purchase price Allocated to the building 10 11 12 13 Residual value 14 15 16 17 Useful life (years) Year Depreciation Expense $400,000.00 18 2 $400,000.00 19 3 $1,022,222.22 20 21 $15,000,000 $10,000,000 $2,000,000 20
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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![5 purchase price was allocated to the building. Depreciation for the first two years was calculated using 6 the straight-
line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year 73, the company switched
to the double - declining - balance depreciation method. 8 9 Compute the amount of depreciation recorded in each of
the three years. \table[[10,,], [11, Purchase price, $15,000,000
At the beginning of Year 1, Fields Realty acquired an omice building for $10,000 VILIC
5 purchase price was allocated to the building. Depreciation for the first two years was calculated using
6
7
8
the straight-line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year
3, the company switched to the double-declining-balance depreciation method.
9 Compute the amount of depreciation recorded in each of the three years.
Purchase price
Allocated to the building
10
11
12
13
Residual value
14
Useful life (years)
15
16
17
18
2
Year
Depreciation Expense
$400,000.00
$400,000.00
19
3
20
21
$1,022,222.22
$15,000,000
$10,000,000
$2,000,000
20](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6ecbc4f7-0574-4bfc-8529-ad640ee58139%2F61115785-44f6-4e61-a77b-fcfb2dc68b1e%2Fjbq1eu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5 purchase price was allocated to the building. Depreciation for the first two years was calculated using 6 the straight-
line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year 73, the company switched
to the double - declining - balance depreciation method. 8 9 Compute the amount of depreciation recorded in each of
the three years. \table[[10,,], [11, Purchase price, $15,000,000
At the beginning of Year 1, Fields Realty acquired an omice building for $10,000 VILIC
5 purchase price was allocated to the building. Depreciation for the first two years was calculated using
6
7
8
the straight-line method, a 20-year useful life, and a $2,000,000 residual value. At the beginning of Year
3, the company switched to the double-declining-balance depreciation method.
9 Compute the amount of depreciation recorded in each of the three years.
Purchase price
Allocated to the building
10
11
12
13
Residual value
14
Useful life (years)
15
16
17
18
2
Year
Depreciation Expense
$400,000.00
$400,000.00
19
3
20
21
$1,022,222.22
$15,000,000
$10,000,000
$2,000,000
20
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