Brick Oven Corporation made the following expenditures during the first month of operations:Attorneys’ fees to organize the corporation $ 9,000Purchase of a patent 40,000Legal and other fees for transfer of the patent 2,500Advertising 80,000Total $ 131,500Required:Record the $131,500 in cash expenditures.
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.
Brick Oven Corporation made the following expenditures during the first month of operations:
Attorneys’ fees to organize the corporation $ 9,000
Purchase of a patent 40,000
Legal and other fees for transfer of the patent 2,500
Advertising 80,000
Total $ 131,500
Required:
Record the $131,500 in cash expenditures.
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