Healthlabs Ltd. purchased lab equipment for $16,500 on January 1, 2020. At that time, management determined that the equipment would have a useful life of three years with no residual value and that the straight-line depreciation method would be used. On January 1, 2021, management revised its initial estimate and determined that the company would be able to use the lab equipment for a total of five years. Determine the depreciation expense for 2021. Depreciation expense for 2021 %24
Healthlabs Ltd. purchased lab equipment for $16,500 on January 1, 2020. At that time, management determined that the equipment would have a useful life of three years with no residual value and that the straight-line depreciation method would be used. On January 1, 2021, management revised its initial estimate and determined that the company would be able to use the lab equipment for a total of five years. Determine the depreciation expense for 2021. Depreciation expense for 2021 %24
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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![Healthlabs Ltd. purchased lab equipment for $16,500 on January 1, 2020. At that time, management determined that the
equipment would have a useful life of three years with no residual value and that the straight-line depreciation method would be
used. On January 1, 2021, management revised its initial estimate and determined that the company would be able to use the lab
equipment for a total of five years.
Determine the depreciation expense for 2021.
Depreciation expense for 2021
2$
eTextbook and Media
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Transcribed Image Text:Healthlabs Ltd. purchased lab equipment for $16,500 on January 1, 2020. At that time, management determined that the
equipment would have a useful life of three years with no residual value and that the straight-line depreciation method would be
used. On January 1, 2021, management revised its initial estimate and determined that the company would be able to use the lab
equipment for a total of five years.
Determine the depreciation expense for 2021.
Depreciation expense for 2021
2$
eTextbook and Media
Save for Later
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