Kenartha Oll recently paid $480,900 for equipment that will last five years and have a residual value of $112.000. By using the machine in its operations for five years, the company expects to earn $178,000 annually, after deducting all expenses except depreciation. Complete the schedule below assuming each of (a) straight-line depreciation and (b) double-declining-balance depreciation. (Do not round intermediate calculations. Enter loss amounts with a minus sign.) (a) Straight-Line Depreciation: Profit before depreciation Depreciation expenses Profit (loss) (b) Double-Declining-Balance Depreciation: Profit before depreciation Depreciation expenses Profit (loss) Year 1 Year 1 Year 2 Year 2 Year 3 Year 3 Year 4 Year 4 Year 5 Year 5 5-Year Totals 6-Year Totals
Kenartha Oll recently paid $480,900 for equipment that will last five years and have a residual value of $112.000. By using the machine in its operations for five years, the company expects to earn $178,000 annually, after deducting all expenses except depreciation. Complete the schedule below assuming each of (a) straight-line depreciation and (b) double-declining-balance depreciation. (Do not round intermediate calculations. Enter loss amounts with a minus sign.) (a) Straight-Line Depreciation: Profit before depreciation Depreciation expenses Profit (loss) (b) Double-Declining-Balance Depreciation: Profit before depreciation Depreciation expenses Profit (loss) Year 1 Year 1 Year 2 Year 2 Year 3 Year 3 Year 4 Year 4 Year 5 Year 5 5-Year Totals 6-Year Totals
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Kenartha Oill recently paid $480,900 for equipment that will last five years and have a residual value of $112,000. By using the machine
in its operations for five years, the company expects to earn $178,000 annually, after deducting all expenses except depreciation.
Complete the schedule below assuming each of (a) straight-line depreciation and (b) double declining-balance depreciation. (Do not
round intermediate calculations. Enter loss amounts with a minus sign.)
(a) Straight-Line Depreciation:
Profit before depreciation
Depreciation expenses
Profit (oss)
(b) Double-Declining-Balance Depreciation:
Profit before depreciation
Depreciation expenses
Profit (loss)
Year 1
Year 1
Year 2
Year 2
Year 3
Year 3
Year 4
Year 4
Year 5
Year 5
5-Year Totals
6-Year Totals
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