Ford for the company president on June 1, 2020 for $75,000. The automobile is expected to have a useful life of 3 year or 120,000 miles. The trade in value (salvage value) at the end of the useful is expected to be $15,000. The automobile will be driven 25,000 miles in 2020, 40,000 miles in 2021, 32,000 miles in 2022, and 23,000 miles in 2023. Straight-Line Depreciation Round all amounts to the nearest dollar. Compute annual depreciation: Months owned in 2020 = Compute depreciation expense for the period June 1 through December 31, 2020 Compute depreciation expense for 2021 Compute depreciation expense for 2022 Compute depreciation expense for the period January 1 through May 31, 2023
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.
Ford for the company president on June 1, 2020 for $75,000. The automobile is expected to have a useful life of 3 year or 120,000 miles. The trade in value (salvage value) at the end of the useful is expected to be $15,000. The automobile will be driven 25,000 miles in 2020, 40,000 miles in 2021, 32,000 miles in 2022, and 23,000 miles in 2023.
Straight-Line
Round all amounts to the nearest dollar.
- Compute annual depreciation:
- Months owned in 2020 =
- Compute depreciation expense for the period June 1 through December 31, 2020
- Compute depreciation expense for 2021
- Compute depreciation expense for 2022
- Compute depreciation expense for the period January 1 through May 31, 2023
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