Journalize depreciation expense on the building for years 15 and 16
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.
Salem hardware consultants purchased a building for $540,000 into appreciated it on a straight line bases over 40 year. The estimate residual value is $100,000 after using the building for 15 years Salem realize that where in tear on the building will wear it out before 40 years and that the estimated residual value should be $88,000 starting with the 16th year sale and began
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