On April 1, 2013 ABC purchased equipment that cost $80,000. The expected useful life is 4 years and the estimated salvage value at the end of its life is $20,000. The company uses Straight-Line depreciation method. The accounting period ends Dec. 31 each year. What is the impact on Assets, Liabilities, SE and NI if ABC neglects to enter the adjusting entry?
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.
On April 1, 2013 ABC purchased equipment that cost $80,000. The expected useful life is 4 years and the estimated salvage value at the end of its life is $20,000. The company uses
What is the impact on Assets, Liabilities, SE and NI if ABC neglects to enter the
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