Blossom Corporation uses the cost model to account for its property, plant, and equipment, which were acquired on January 1, 2023, for $201000. Blossom uses straight-line depreciation and estimates the assets will have an eight-year life with no residual value. Assuming Blossom did not experience any impairment losses, the December 31, 2024, carrying amount of the assets is O $125625. O $201000. O $175875. O $150750.
Blossom Corporation uses the cost model to account for its property, plant, and equipment, which were acquired on January 1, 2023, for $201000. Blossom uses straight-line depreciation and estimates the assets will have an eight-year life with no residual value. Assuming Blossom did not experience any impairment losses, the December 31, 2024, carrying amount of the assets is O $125625. O $201000. O $175875. O $150750.
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:Blossom Corporation uses the cost model to account for its property, plant, and
equipment, which were acquired on January 1, 2023, for $201000. Blossom uses
straight-line depreciation and estimates the assets will have an eight-year life with
no residual value. Assuming Blossom did not experience any impairment losses,
the December 31, 2024, carrying amount of the assets is O $125625. O $201000.
O $175875. O $150750.
Blossom Corporation uses the cost model to account for its property, plant, and equipment, which were acquired on January 1, 2023,
for $201000, Blossom uses straight-line depreciation and estimates the assets will have an eight-year life with no residual value.
Assuming Blossom did not experience any impairment losses, the December 31, 2024, carrying amount of the assets is
O $125625.
O $201000
O $175875.
O $150750.
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