I am working on Case 6.34 of the text book, "Accounting, What do the numbers mean". The last part of the case states: Assume that the use of an accelerated depreciation method would have resultin 25% more accumulated depreciatiom that reported at July 30,2017, and that Campbells Retained Earnings account would have been affected by te entire difference. By what percentage would this have reduced the retained earnings amount reported at July 30,2017? Here's what I have so far: If the accelerated depreciation method increased by 25% was used than the accumulated depreciation reported would result in a change of $897.25. This is calculated by multiplying .25*3589 as reported on the balance sheet. Then the new total would be $4,486.25 of accumulated depreciation and the final total would change from $2454 to $1556.75. I am not sure how calculate the percentage decrease on the retained earnings. What information do I need to loook for?
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.
I am working on Case 6.34 of the text book, "Accounting, What do the numbers mean". The last part of the case states:
Assume that the use of an accelerated
Here's what I have so far:
If the accelerated depreciation method increased by 25% was used than the
I am not sure how calculate the percentage decrease on the retained earnings. What information do I need to loook for?
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