A factory machine was purchased for $ 68,555 on May 1st. It was estimated that it would have an $ 2,094 salvage value at the end of its 10-year useful life. Rounding to the nearest one dollar, what is the depreciation expense recorded in year one using straight-line depreciation?
A factory machine was purchased for $ 68,555 on May 1st. It was estimated that it would have an $ 2,094 salvage value at the end of its 10-year useful life. Rounding to the nearest one dollar, what is the depreciation expense recorded in year one using straight-line depreciation?
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:A factory machine was purchased for $ 68,555 on May 1st. It was estimated that it
would have an $ 2,094 salvage value at the end of its 10-year useful life. Rounding to
the nearest one dollar, what is the depreciation expense recorded in year one using
straight-line depreciation?
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