**Depreciation Exercise Analysis***Instructions for Calculating Straight-line Depreciation*The following information is used for calculating depreciation in the exercises provided:- **Purchase Details**: On April 1, Cyclone Company acquires a trencher for $304,000.- **Useful Life and Salvage Value**: The machine has an expected useful life of five years and a salvage value of $52,000.**Exercise 8-11 (Algo) - Straight-line, Partial-year Depreciation***Objective*: Compute the depreciation expense as of December 31 for both the first and second years, utilizing the straight-line depreciation method.**Steps for Calculation**:1. **Choose Numerator and Denominator**: - Formula: (Cost of Equipment - Salvage Value) / Useful Life - This calculation determines the annual depreciation expense.2. **Depreciation Expense Calculation**: - Yearly calculation involves multiplying the annual depreciation by the fraction of the year the asset was in use. | Year | Annual Depreciation | Fraction of Year | Depreciation Expense | |---------------|---------------------|------------------|----------------------| | First Year | | | | | Second Year | | | |**Diagram/Graph Explanation**:The table provides a structured way to input values and compute the depreciation expenses:- **Choose Numerator/Denominator**: Placeholder for setting up the straight-line depreciation formula.- **Yearly Calculations**: Columns to record the annual depreciation and calculate the depreciation expense for each respective year, based on the fraction of the year.This exercise helps reinforce the understanding of straight-line depreciation, especially how to handle partial-year depreciation calculations.

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Description: **Depreciation Exercise Analysis***Instructions for Calculating Straight-line Depreciation*The following information is used for calculating depreciation in the exercises provided:- **Purchase Details**: On April 1, Cyclone Company acquires a trench

Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets due to wear and tear of the assets. Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life of the assetsDepreciable amount = Cost of the assets - Residual value = $304,000 - $52,000 = $252,000Depreciable amount / Expected life of the assets = Annual Depreciation $252,000 / 5 years = $50,400 Year Annual Depreciation x Fraction of year = Depreciation Expense First Year $50,400 x 9/12 = 0.75 = $37,800 Second Year $50,400 x 1 = $50,400

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On April 1, Cyclone Company purchases a trencher for $304,000. The machine is expected to last five years and have a salvage value of $52,000. xercise 8-11 (Algo) Straight-line, partial-year depreciation LO C2 Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the straight-line method. Choose Numerator: Year First year Second year Annual Depreciation x Choose Denominator: Fraction of Year = = = = = Annual Depreciation Annual depreciation Depreciation Expense 0

On April 1, Cyclone Company purchases a trencher for $304,000. The machine is expected to last five years and have a salvage value of $52,000. xercise 8-11 (Algo) Straight-line, partial-year depreciation LO C2 Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the straight-line method. Choose Numerator: Year First year Second year Annual Depreciation x Choose Denominator: Fraction of Year = = = = = Annual Depreciation Annual depreciation Depreciation Expense 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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