the depreciation of non-current asset also depends not just the cost of asset but also itsuseful life. Now you are given a scenario where the company has purchased an asset of$15000 having an estimated life of 5 years. If the business uses straight line balancemethod then it will depreciate its asset with the amount of $3000.Then after two years the business decided the business found that life of asset wasunderestimated actually its 8 years. the asset still had 6 years in use to come.You are required to consider the above situation and depreciate the asset over itsuseful life that how it will appear in company's books of accounts.Company further seeks your assistance to select the appropriate method ofdepreciation either to go for reducing balance method or straight-line balancemethod. Which method you recommend the company and on what bases?

Step 1 Depreciation is the written down in the value of the assets.

Company further seeks your assistance to select the appropriate method of depreciation either to go for reducing balance method or straight-line balance method. Which method you recommend the company and on what bases?

Company further seeks your assistance to select the appropriate method of depreciation either to go for reducing balance method or straight-line balance method. Which method you recommend the company and on what bases?

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

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

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the depreciation of non-current asset also depends not just the cost of asset but also its
useful life. Now you are given a scenario where the company has purchased an asset of
$15000 having an estimated life of 5 years. If the business uses straight line balance
method then it will depreciate its asset with the amount of $3000.
Then after two years the business decided the business found that life of asset was
underestimated actually its 8 years. the asset still had 6 years in use to come.
You are required to consider the above situation and depreciate the asset over its
useful life that how it will appear in company's books of accounts.
Company further seeks your assistance to select the appropriate method of
depreciation either to go for reducing balance method or straight-line balance
method. Which method you recommend the company and on what bases?

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