An asset with a cost of £250,000 and no salvage value were originally depreciated on a straight-line basis for the first 7 years of its 25-year useful life, the book value of the asset at the end of year 7 would be £180,000 (£250,000 – £70,000). If the estimated useful life was revised at the end of year 7, and the asset was assumed to have a remaining useful life of 9 years, the following journal entry would be made for depreciation at the end of year 8: O a. Debit: Depreciation Expense 10,000 Credit: Accumulated Depreciation 10,000 O b. None of these O c. Debit: Depreciation Expense 20,000 Credit: Accumulated Depreciation 20,00O d. Debit: Accumulated Depreciation 20,000 Credit: Depreciation Expense 20,000

An asset with a cost of £250,000 and no salvage value were originally depreciated on a straight-line basis for the first 7 years of its 25-year useful life, the book value of the asset at the end of year 7 would be £180,000 (£250,000 – £70,000). If the estimated useful life was revised at the end of year 7, and the asset was assumed to have a remaining useful life of 9 years, the following journal entry would be made for depreciation at the end of year 8: O a. Debit: Depreciation Expense 10,000 Credit: Accumulated Depreciation 10,000 O b. None of these O c. Debit: Depreciation Expense 20,000 Credit: Accumulated Depreciation 20,00O d. Debit: Accumulated Depreciation 20,000 Credit: Depreciation Expense 20,000

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Description: An asset with a cost of £250,000 and no salvage value were originally depreciated on a straight-linebasis for the first 7 years of its 25-year useful life, the book value of the asset at the end of year 7 wouldbe £180,000 (£250,000 – £70,000). If th

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

An asset with a cost of £250,000 and no salvage value were originally depreciated on a straight-line
basis for the first 7 years of its 25-year useful life, the book value of the asset at the end of year 7 would
be £180,000 (£250,000 – £70,000). If the estimated useful life was revised at the end of year 7, and the
asset was assumed to have a remaining useful life of 9 years, the following journal entry would be made
for depreciation at the end of year 8:
O a.
Debit: Depreciation Expense 10,000
Credit: Accumulated Depreciation 10,000
O b. None of these
C.
Debit: Depreciation Expense 20,000
Credit: Accumulated Depreciation 20,00O
Od.
Debit: Accumulated Depreciation 20,000
Credit: Depreciation Expense 20,000

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