Assume a company’s beginning and ending balances in the Accumulated Depreciation account are $30,000 and $44,000, respectively. During the period the company sold one noncurrent asset that had an original cost of $8,000. The cash proceeds from the sale were $3,000 and the gain on the sale was $1,000. What is the amount of the depreciation charges that the company would include in the operating activities section of its statement of cash flows? Multiple Choice $18,000 $20,000 $24,000 $8,000
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.
Assume a company’s beginning and ending balances in the
-
$18,000
-
$20,000
-
$24,000
-
$8,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
