A company purchased a piece of equipment for $120,000 and estimated that the asset will have no salvage value at the end of its 15-year useful life. At the end of Year 5 of ownership, when accumulated depreciation was $40,00 and the asset's book value was $80,000, the company revised the asset's estimated useful life to a total of 10 years. What is the appropriate accounting treatment beginning with Year 6? O The equipment will depreciate $40,000 over the next 10 years. O The equipment will depreciate $80,000 over the next 10 years. The equipment will depreciate $40,000 over the next five years. O The equipment will depreciate $80,000 over the next five years.

A company purchased a piece of equipment for $120,000 and estimated that the asset will have no salvage value at the end of its 15-year useful life. At the end of Year 5 of ownership, when accumulated depreciation was $40,00 and the asset's book value was $80,000, the company revised the asset's estimated useful life to a total of 10 years. What is the appropriate accounting treatment beginning with Year 6? O The equipment will depreciate $40,000 over the next 10 years. O The equipment will depreciate $80,000 over the next 10 years. The equipment will depreciate $40,000 over the next five years. O The equipment will depreciate $80,000 over the next five years.

Name: A company purchased a piece of equipment for $120,000 and estimated t
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Description: A company purchased a piece of equipment for $120,000 and estimated that the asset will have no salvage value t the end of its 15-year useful life. At the end of Year 5 of ownership, when accumulated depreciation was $40,000and the asset's book valu

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

A company purchased a piece of equipment for $120,000 and estimated that the asset will have no salvage value t the end of its 15-year useful life. At the end of Year 5 of ownership, when accumulated depreciation was $40,000
and the asset's book value was $80,000, the company revised the asset's estimated useful life to a total of 10 years.
What is the appropriate accounting treatment beginning with Year 6?
O The equipment will depreciate $40,000 over the next 10 years.
O The equipment will depreciate $80,000 over the next 10 years.
O The equipment will depreciate $40,000 over the next five years.
O The equipment will depreciate $80,000 over the next five years.

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