Beautiful Beaches, Inc. purchased equipment for $63,000 on July 1, 2019. The equipment is expected to have a seven-year service life, with a residual value of $3,500 at the end of seven years. Using the straight-line method, depreciation expense for 2021 would be: Group of answer choices a) $4,500 b) $9,000 c) $9,500 d) $4,250 e) $8,500
Beautiful Beaches, Inc. purchased equipment for $63,000 on July 1, 2019. The equipment is expected to have a seven-year service life, with a residual value of $3,500 at the end of seven years. Using the straight-line method, depreciation expense for 2021 would be: Group of answer choices a) $4,500 b) $9,000 c) $9,500 d) $4,250 e) $8,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:Beautiful Beaches, Inc. purchased
equipment for $63,000 on July 1, 2019.
The equipment is expected to have a
seven-year service life, with a residual
value of $3,500 at the end of seven
years. Using the straight-line method,
depreciation expense for 2021 would
be:
Group of answer choices
a) $4,500
b) $9,000
c) $9,500
d) $4,250
e) $8,500
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