On 1 April 2009 Foley Ltd purchased machinery for $250,000. Residual value was estimated to be $10,000. The estimated useful life is 10 years. Depreciation expense using the straight-line method for the year ended 30 June 2009 is? Choices: $6,000. $6,250. $24,000. $nil. 2. Marsh Ltd purchased factory equipment that was installed and put into service 1 July 2008, at a total cost of $90,000. Residual value was estimated at $6,000. The equipment is being depreciated over four years using the diminishing-balance method and a depreciation rate of 50%. For the year ended 30 June 2010, Marsh should record depreciation expense on this equipment of? Choices: $21,000. $22,500. $42,000. $45,000.
On 1 April 2009 Foley Ltd purchased machinery for $250,000. Residual value was estimated to be $10,000. The estimated useful life is 10 years. Depreciation expense using the straight-line method for the year ended 30 June 2009 is? Choices: $6,000. $6,250. $24,000. $nil. 2. Marsh Ltd purchased factory equipment that was installed and put into service 1 July 2008, at a total cost of $90,000. Residual value was estimated at $6,000. The equipment is being depreciated over four years using the diminishing-balance method and a depreciation rate of 50%. For the year ended 30 June 2010, Marsh should record depreciation expense on this equipment of? Choices: $21,000. $22,500. $42,000. $45,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
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1. On 1 April 2009 Foley Ltd purchased machinery for $250,000. Residual value was estimated to be $10,000. The estimated useful life is 10 years. Depreciation expense using the straight-line method for the year ended 30 June 2009 is?
Choices:
$6,000.
$6,250.
$24,000.
$nil.
2. Marsh Ltd purchased factory equipment that was installed and put into service 1 July 2008, at a total cost of $90,000. Residual value was estimated at $6,000. The equipment is being depreciated over four years using the diminishing-balance method and a depreciation rate of 50%. For the year ended 30 June 2010, Marsh should record depreciation expense on this equipment of?
Choices:
$21,000.
$22,500.
$42,000.
$45,000.
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